BACHY Bank of China Ltd (PK)

Asian shares were broadly down on Wednesday with the exception of Japan, where stocks rose after a stronger dollar pushed the yen lower.

The Nikkei Stock Average was last up 0.8%, while Australia's S&P/ASX 200 fell 1.1% and Korea's Kospi was down 0.3%.

"Overall, the market is more cautious than bearish," said Castor Pang, head of research at broker Core Pacific-Yamaichi International.

Overnight, the dollar gained on expectations that the U.S. Federal Reserve was inching closer to raising interest rates. The greenback rose 1.1% against the Japanese yen in U.S. trade, while the WSJ Dollar Index, which measures the U.S. currency against 16 others, hit a one-month high.

This lifted shares of Japanese exporters, which benefit from a weaker yen. Toyota Motor Corp. rose 2.1% and Nissan Motor Co. added 1.4%. Camera maker Canon Inc. gained 1.7%.

The gains in Japanese equities came even as the latest data showed that the nation's industrial output remained unchanged in July—underperforming economists' expectations for an increase of 0.8%—following a 2.3% rise in June.

While the region's stocks have retreated on concerns of higher U.S. interest rates, analysts say that worries of capital outflows are overdone. That is because strong growth and high yields in the region's markets would keep capital in emerging markets, they say.

"The result of U.S. payrolls data will drive market speculation over the upcoming rate hike," said Will Leung, head of investment strategy at Standard Chartered Wealth Management. The data, due Friday, will likely determine whether the Fed will raise rates as early as September, he said.

The Shanghai Composite Index traded up 0.1%, while Hong Kong's Hang Seng Index was roughly flat, as Chinese lenders got a boost from their first-half earnings reports.

Among them, Hong Kong-traded shares of Bank of China gained 1.2% after it reported late Tuesday a 2.5% on-year rise in first-half net profit, lifted by strong growth in fee income.

Meanwhile in Korea, shares of shipping firm Hyundai Merchant Marine Co. surged 21% after the government prodded the company to acquire the healthy assets of troubled Hanjin Shipping Co., which is teetering on the verge of bankruptcy following a decision by its creditors to cut financial support.

"The government will actively look for ways for Hyundai to take over ships, business networks and its workforce if Hanjin files for receivership," Jeong Eun-bo, vice chairman of South Korea's Financial Services Commission, said Wednesday.

Meanwhile, shares of Singapore Airlines Ltd. headed lower for the fourth straight session, and was last down 0.2%, on the spread of the Zika virus in the city state.

The airline claims nearly half of the market share of passenger traffic through Singapore's Changi Airport, and as a result it is the most vulnerable to news that could hurt Singapore tourism, says K. Ajith, an aviation analyst at UOB-Kay Hian.

Gold prices edged up in Asia trade, after falling overnight because of the strength in the dollar, though they still remain near a one-month low. The precious metal is caught between expectations of a U.S. rate increase and demand for it as a haven due to political uncertainties across the world and as a hedge against inflation.

Mitsuru Obe, In-Soo Nam, Biman Mukherji and Saurabh Chaturvedi contributed to this article.

Write to Kenan Machado at kenan.machado@wsj.com

(END) Dow Jones Newswires

August 31, 2016 00:55 ET (04:55 GMT)

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