Asia stocks were mixed on Thursday, dragged by declines on the mainland, knocking the region's Christmas cheer before the holiday period.
But energy stocks still outperformed amid a recovery in oil prices. U.S. crude rose as much as 1 percent in Asian trade after data on Wednesday showed U.S. crude inventories fell by 5.9 million barrels in the last week, compared with expectations for an increase of 1.1 million barrels.
"One could be forgiven for thinking that Santa's sleigh runs on Light-Sweet Cushing, Oklahoma Crude....Of course, this looks like a temporary bounce with plenty of potential for further declines next year when Iran begins exporting oil again," said IG market strategist Angus Nicholson in a morning note.
A third day of gains on Wall Street helped limit further losses in Asia. More healthy economic data saw all three major U.S. averages rally 1 percent overnight . U.S. personal consumption expenditures rose 0.3 percent on-month in November , adding to the market's optimistic mood one day after better-than-expected third-quarter growth data .
Sydney and Hong Kong had a half-day of trading on Thursday while Tokyo and Shanghai will be the only major Asian markets open on Friday.
Shanghai drops 0.7%
China's benchmark Shanghai Composite (Shanghai Stock Exchange: .SSEC) extended losses after snapping a two-day rally on Wednesday.
Insurers were mixed after regulators issued tighter disclosure requirements for firms buying stakes in listed companies. China Life Insurance (Shanghai Stock Exchange: 1628-SZ) climbed 2 percent but Ping An Insurance (Shanghai Stock Exchange: 1318-SZ) eased 0.1 percent.
The yuan (: ) weakened to 6.4785 per dollar after the People's Bank of China said late on Wednesday that it will extend the currency's trading hours starting January 4. By doing so, trading in the Chinese forex market will overlap with European trading hours, which will boost Beijing's goal of internationalizing the currency.
Hong Kong's Hang Seng Index (Hong Kong Stock Exchange: .HSI) ended 0.4 percent higher with oil producers Petrochina (Shanghai Stock Exchange: 1857-SZ), Sinopec (Shanghai Stock Exchange: 688-SZ) and CNOOC (Hong Kong Stock Exchange: 883-HK) leading gains by 2-3 percent each,
Nikkei dips 0.5%
Japan's Nikkei (CBOE: .NKXQ) index initially opened higher following Wednesday's public holiday but then erased gains in the afternoon session.
News that the government approved a record $800 billion fiscal 2016 budget to boost growth was unable to lift sentiment. Meanwhile, minutes from the Bank of Japan's November policy review confirmed the central bank's easing bias, with members saying more stimulus is warranted if inflation doesn't pick up.