However, trading was cautious as the US Federal Reserve's policy-setting Federal Open Market Committee prepared to open a two-day meeting expected to hike rates. Markets are expecting a 25 basis-point rise in the US short-term interest rates, but there are some concerns that the Federal Reserve may announce even higher rates or that a series of increases may ensue.

In Tokyo, share prices rose by 1 per cent, but trading remained modest as investors were cautious towards taking fresh positions ahead of an imminent hike in US interest rates which could pressure on US share prices. The key Nikkei average of 225 selected issues rose 172.21 points to end at 17,782.79 for, its highest finish in nearly 21months since October 6, 1997, when it stood at 17,824.78. The Topix index of all issues on the first section of the Tokyo Stock Exchange was up 7.78 points at 1,425.24.

In Hong Kong, share prices fell 0.5 per cent in cautious trading amid jitters over a widely expected US interest rate increase. The key Hang Seng index lost 74.80 points to close at 13,765.49.

In Singapore, prices closed 0.8 per cent higher on buying of selected bluechips led by Singapore Airlines Ltd. The Straits Times Index rose 17.42 points to 2,181.08; the broader All-Singapore Index rose 3.93 points to 606.46. Dealers said institutions were sidelined ahead of the FOMC meeting meeting and that trading was dominated by retail activity.

Malaysian share prices closed 1.1 per cent higher due to retail buying and on window dressing for half-year book closures, dealers said.