Mazda drives into pole position

EXPORTERS and banks continued to benefit from a slightly rosier economic outlook for the

Carmaker Mazda rose 2.8% to 293 yen after saying its revolutionary, hydrogen-powered rotary engine may be on the market within five years. It is reportedly preparing for the Tokyo motor show in October when it will unveil a prototype of the engine, which would give vehicles a 125-mile range on a tank of fuel.

The broader market reached two-week highs as investors continued to react to yesterday's favourable GDP figures, somewhat overshadowed in the run-up to the Federal Reserve's no-change interest rate decision in Washington.

The Nikkei 225 Average was up 187.94 points, or 2%, at 9752.75. That makes a 4.6% rise for the week so far.

Japan's second-largest steelmaker, JFE Holdings, led the market with a 6.8% surge to 2265 yen after earlier hitting a lifetime high of 2280 yen. Nippon Steel, the nation's number one, was up 3.2% at 196 yen after earlier hitting its highest level since July last year.

Chemical maker Showa Denko, which saw operating profits at its petrochemicals division more than double, added 3.8% to 216 yen.

Banks were also in favour. UFJ Holdings built on yesterday's gains to surge 6.2% to 258,000 yen.

Solid earnings - or the expectation of them - helped Australian stocks. News Corp, which is expected to announce doubled profits when it reports after the market close in Sydney, put on 1.4% to A$12.41.

ANZ Bank was punished for what was seen by many as honesty. It said it believed the coming year 'looks like it might be challenging' and was promptly marked down 1.26% to A$18. Others attributed its fall to the fact it is believed to be front-runner to pick up Lloyds TSB's pricey National Bank of New Zealand, although the other main contender, Westpac, rose 0.3% to A$16.79. Westfield America Trust put on 0.5% to A$2.03 after a 65% increase in half-year earnings.

Poker-machines maker Aristocrat added to yesterday's gains, rising 2.3% to A$1.76 on hopes the worst may be over.

Miner WMC Resources fell 2% to A$3.78 after it posted a flat first-half profit. Rio Tinto was also down, 0.6% to A$31.57, while BHP Billiton rose 0.6% to A$10.07. The All Ordinaries index nudged 23.4 points higher to 3158.1.

Hong Kong shares reached a 12-month high in early trade with the Hang Seng index up 117.3 to 10,301.5.

One of the star performers was property conglomerate Wharf Holdings, up 6.9% at HK$17. It was playing catch-up with the rest of the sector, which it has lagged for some time. Exporters were buoyed by the Fed's decision to keep rates on hold.

Johnson Electric Holdings advanced by 1.9% to HK$10.45 while consumer goods shipper Li & Fung rose 1.8% to HK$11.15 on expectations of a 27% jump in interim earnings.

Singapore shares were up for a fifth day with blue-chips, particularly banks, the most popular.

The Straits Times index put on 29.8 points to 1593.5. OCBC Bank, which raised its mortgage interest rates, gained 2.7% to S$11.20. DBS Bank surged 4.5% to S$11.70 and United Overseas Bank added 2.3% to S$13.46.