Markets in Australia, Singapore and the Philippines also ended in positive territory but Indonesian share prices edged lower. Shanghai's B shares, nominally reserved for foreign investors, maintained their dizzying upward momentum, rising 8.5 per cent on continued buying by domestic institutions.Share prices in Tokyo closed higher as investors jumped on signs Japan would come up with new economic measures to tackle its growing employment problem, brokers said.

The key Nikkei average of 225 leading issues on the Tokyo Stock Exchange climbed 296.85 points to end at 16,408.50. The Topix index of all first-sectionissues gained 20.29 points to 1,317.48.

Some institutional investors placed heavy buy orders in the afternoon and others in the market followed suit as expectations for a new economic stimulus package mounted, brokers said. The number of jobless in Japan in April hit a record 3.42 million, with the unemployment rate holding at 4.8 per cent for the second month, officials said.

At a cabinet meeting, Premier Keizo Obuchi told ministers to come up with proposals to tackle the problem. Tokyo's plans may include new spending. The government would not sit idly at a time when Japan would likely be pressured to take new action at the group of eight summit in Germany later this month, brokers said.

Hong Kong: Hong Kong share prices rose 1.8 per cent on selective bargain hunting spurred by gains in the Tokyo market, dealers said. ``The market followed the gains made in the Tokyo market,'' said Sean Li, associate director at Amsteel Securities, noting the absence of local trading incentives.

Hang Seng indexgained 216.44 points to close at 12,363.56. Dealers said sentiment remained cautious over the interest rate outlook in the United States and uncertainty over Sino-US relations, set back by allegations that China had stolen US nuclear secrets.

Vickers Ballas sales director Anthony Mak said the bargain hunting was modest and insufficient to dictate the future direction of the market, adding investors were still waiting for clearer signs of the US interest rate direction.

Singapore: Singapore share prices closed 0.3 per cent higher on continued retail interest mainly in speculative penny stocks. There was little impact from comments by the urban redevelopment authority that strong demand for private residential units was unsustainable, dealers said.

``The possible softening of buying interest in the property market is already anticipated,'' a dealer with a local brokerage said. The benchmark Straits Times Index rose 5.02 points to 1,908.88, while the broader All-Singapore index rose by nearly a point to537.60.

Kuala Lumpur: Malaysian share prices closed 2.2 per cent higher in moderate trade due to bargain hunting amid rumours that general elections will be held soon. ``It is mostly retail investors, but there are also some local funds, and a smaller amount of foreign buying,'' an institutional dealer with a local brokerage said.

Kuala Lumpur Stock Exchange composite index gained 16.33 points to finish at 759.37 while the lesser second board rose 7.82 points or 2.9 per cent to 158.81.

Another dealer at a local brokerage said continued speculation that national elections would be called as early as September led to buying on expectations of a pre-election rally.

Bangkok: Thai shares rose 1.8 per cent, mirroring gains on major regional markets, analysts said. Share prices closed higher on retail-led buying, mainly in the communications and Chemical sectors amid stronger earnings outlooks, dealers said.

The Stock Exchange of Thailand (SET) main index firmed 8.19 points to 461.79, while the select SET50 added 0.67 to 34.51.

An analyst with United Securities said the firmer close in some regional markets helped boost sentiment and encouraged follow-through buying in the afternoon.

Jakarta: Indonesian share prices closed 0.3 per cent down with bank stocks coming under pressure on concerns over additional rights issues to finance recapitalisation costs, dealers said.

A dealer with Exim Securities said declines occurred across the board with increases in selective big caps cushioning the falls. He said banking stocks came under selling pressure, pushing down other sectors.