Weaker oil prices gave a boost to Asian stock markets on Tuesday, with Japanese shares hitting a two-week high amid fresh optimism about earnings in the banking sector.

Tokyo ended firmer for the first time in three sessions after a surprise earnings upgrade from Mizuho boosted bank shares and overshadowed pre-US election jitters.

The Nikkei 225 average gained 1.4 per cent to 10,887.81 while the Topix index was up 1.3 per cent at 1,094.88.

A 2.8 per cent rise in the banking sub-index accounted for much of the market's uplift. Mizuho gained 4 per cent to Y418,000 after Japan's biggest bank upgraded its profit forecast thanks to lower-than-expected loan loss provisions.

The group lifted its estimates for earnings in the half-year to September by 64 per cent to Y230bn.

Rival SMFG, which unexpectedly cut its earnings outlook on Friday, rose 3.1 per cent to Y689,000 while MTFG gained 2.7 per cent to Y906,000 and UFJ was up 3.2 per cent at Y491,000.

Canon, the office equipment and digital camera maker, rose 1.8 per cent to Y5,240 after Goldman Sachs raised its rating on the group to “outperform”.

Rakuten, an internet group, climbed 2.5 per cent to Y795,000 on rumours, later confirmed, that the company had been selected as the owner of a new professional baseball team set to be established soon.

Livedoor, a rival group that lost out in the battle, closed up 9.2 per cent at Y393 before the news was confirmed.

Takefuji, Japan's top consumer lender, rose in the morning but ended down 0.3 per cent at Y6,590 as it emerged Yasuo Takei, founder and controlling shareholder, had held talks on a new plan for offloading some of his shares in the group that would nonetheless leave him with a substantial stake.

Toyota, the country's top car maker, fell 1.5 per cent to Y4,040 after posting a surprise 2 per cent drop in quarterly operating profits due to rising materials costs. The group's first-half operating earnings, however, rose 13 per cent.

Isetan, a leading department store group, rose 4 per cent to Y1,143 after more than doubling its half-year profit forecast.

Hong Kong pushed ahead as the property and shipping sectors recorded solid gains. The Hang Seng Index rose 1.6 per cent to 13,308.74.

Real estate stocks outperformed other blue chips, with the property sub-index adding more than 2 per cent. COSCO Pacific, the shipping company, jumped 2.3 per cent to HK$13.60 following the decline in oil prices.

Oil refiner Sinopec climbed 4.2 per cent to HK$3.1 after announcing it would buy petrochemical production assets from its parent company.

Sydney ended at a record high for a fifth consecutive session, as News Corp rose 2.3 per cent to A$10.96 on its second-last day as a market heavyweight in Australia. On Thursday, the company will switch its legal headquarters and main listing to the US.

St George Bank hit an all-time peak of A$23.87 in the wake of Tuesday's strong annual results, although the shares eased back to finish just 0.3 per cent higher at A$23.66

The S&P/ASX 200 index edged up 0.2 per cent to 3798.6.

Jakarta also closing at an all-time high following the release of some encouraging domestic inflation data. The composite Index rose 2.1 per cent to 881.4, on high turnover of Rp1,750bn.

Telekom rose 5.2 per cent to Rp4,575 while Bank Central Asia added 3 per cent to Rp2,550.

Taipei was helped by gains for technology stocks, and the weighted index finished 1.8 per cent higher at 5759.61.

Taiwan Semiconductor Manufacturing rose 2.5 per cent to T$45.00, while computer screen maker AU Optronics soared 6.3 per cent to T$35.30.

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