LONDON (CNNfn) - Tokyo's equity market finished at its highest level in almost three years Wednesday, bounding above the 20,000 mark after a robust overnight performance on Wall Street. But Hong Kong's key index ended sharply lower, undercut by a steep slide in Cable & Wireless HKT as its controlling shareholder accepted a Pacific Century CyberWorks offer that was below the market price of HKT shares.
The benchmark Nikkei Average of 225 leading shares finished up 122.15 points, or 0.6 percent, at 20,081.67, a 31-month high, inspired by a broad rally across Wall Street's three leading indexes. On Tuesday, the tech-heavy Nasdaq composite surged 118.72 points, or 2.6 percent, to 4,696.57 - its 12th record close of the year - while the Dow Jones blue chips, which slid 3.5 percent last week, rose almost 1 percent to 10,128.31 as investors snapped up cheapened "old economy" stocks. The broader S&P 500 advanced 1.4 percent.
"The Tokyo market was helped by a tailwind from overnight gains in U.S. stocks, especially the record close on the Nasdaq," Hidenori Karaki, an equities general manager at Tokyo Mitsubishi Personal Securities, told Reuters. Karaki added that the Nikkei wasn't likely to find solid support above 20,000 until investors had unwound their cross-shareholdings in the latter half of March, ahead of the end of the fiscal business year at the end of the month.
The strong Nikkei rally breathed new life into the Japanese currency, which strengthened more than a yen against the U.S. dollar to around 109.18 from a level of 110.23 in late New York trade Tuesday. The euro hovered just below the $0.9700 level, almost half a cent firmer than its late New York level Tuesday around $0.9641. The single currency now stands midway between the trough of $0.9390 hit earlier this week in Asia and one-to-one parity against the dollar, seen as a psychological benchmark for the currency.
In Hong Kong the leading Hang Seng index closed down 1.9 percent, or 325.85 points at 16,843.59, broadsided by losses in C&W HKT and anchor stock China Telecom.
HKT tumbled more than HK$3, or 12.3 percent, to HK$22.75 after Cable & Wireless, the telephone company's U.K.-based majority owner, accepted an offer from Pacific Century CyberWorks to buy its 54 percent stake. PCCW made two alternate offers, containing different ratios of shares and cash, that value each HKT share between HK$22.99 and HK$24.36 - below HKT's recent share price, but 38 percent higher than the price before the offer was announced. Pacific Century CyberWorks shares fell 7.9 percent to HK$20.40.
The All Ordinaries index in Sydney ended 1.8 percent higher at a record 3,192.6, as bond strength gave a boost to the index's big banks - which all ended up more than 2 percent amid tame retail trade data. Rupert Murdoch's News Corp., which accounts for more than 15 percent of the index by weighting, ended up nearly 4 percent. The stock overcame an initial plunge prompted by uncertainty over News Corp.'s planned alliance with Singapore Telecom following the latter's defeat in its bid for Cable & Wireless HKT.
Singapore's Straits Times Index eased 0.3 percent to end at 2,114.05 amid selling pressure in bank and property stocks after the Singapore government said Tuesday it would hike development fees for residential land by 27 percent and for commercial land by 11 percent.
Jakarta shares fell nearly 2 percent to close at 565.478 amid rumors of hedge-fund speculation on targeted blue chip stocks. Kuala Lumpur stocks retreated 1.25 percent, dragged down by dumping of shares of Diversified Resources Group and its associates, Hicom Holdings, Gadek Malaysia and Gadek Capital as investors took a dim view of their planned merger. DRG slid 19.6 percent, while its affiliates fell between 11.5 percent and 16.3 percent.
On the corporate front, high-tech stocks shone brightest in Japan Wednesday on the back of the Nasdaq rally.
Toshiba Corp. and NEC Corp. posted solid gains a day after saying they are in talks over a possible partnership in their aerospace and satellite businesses. Toshiba and NEC both advanced 4.5 percent. Consumer electronics giant Sony Corp. ended up 0.3 percent at 32,600 yen after earlier reaching a new intraday high of 33,900. Sony continued its strong recent run ahead of the March 4 launch of its PlayStation2 video-game console.
Heading in the other direction, game console maker Sega Enterprises skidded by its daily limit of 500 yen, or almost 14 percent, to close at 3,100 yen, extending Tuesday's sharp setback after the company lowered its full-year earnings forecast.
Shares of major brokerage firms rose, helped by the Nikkei's strength.
In Hong Kong, property conglomerates Cheung Kong (Holdings) and its subsidiary, Hutchison Whampoa, both lost ground, with Cheung Kong giving up 2.4 percent to close at HK$101.00 and Hutchison easing 0.4 percent to HGK$121.50 despite a generally positive result from the territory's first land auction of 2000 Tuesday.
China Telecom shed 2.1 percent to close at HK$70.00.
Web portal tom.com - controlled by property tycoon Li Ka-shing - bucked the broader market decline, rocketing more than 335 percent on its debut on the Growth Enterprise Market's second board. The stock rose to HK$7.75 from its launch price of HK$1.78.
Elsewhere in Asia, the weighted index in Taiwan surged 2.7 percent to 9,689.10 amid market-friendly remarks from President Lee Teng-hui. Taiwan is the favorite market for overseas equity fund mangers this year, according to recent survey cited by Reuters.
Thai stocks lost 0.7 amid weakness in finance and banking issues, while Manila shares closed up about three quarters of a percent, snapping a three-session losing streak, supported by advances in Philippine Long Distance Co. and conglomerate Ayala Corp.
South Korean markets were closed Wednesday for a public holiday. 
--from staff and wire reports
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