Hong Kong stocks closed 2.2 per cent higher, helped by the firmer yen and investors while Tokyo made marginal gains. Profit-taking and fears of recession however pulled down share prices in Singapore, Kuala Lumpur and Jakarta.

Hong Kong's key Hang Seng index ended up 185 points at 8,629.18.``There's a little bit of relief, local interbank rates eased a little,'' Miles Remington of SG Securities told AFP.

``The yen seems to be controlling our short-term destiny on a daily basis. There was also a bit of bargain-hunting coming through.''

However Remington warned that the HangSeng "certainly hasn't found the bottom,"and volume was very thin at 3.5 billion Hong Kong dollars (450 million US).

Peter Lai, director of OCBC Securities, said "expectations of permanent tax cutsin Japan improved sentiment, while no fundamentals have changed." TOKYO: Japanese share prices closed 0.7 per cent higher, backed by growing expectations of permanent income tax cuts, brokers said. Prime Minister Ryutaro Hashimoto said after the market closed that his government would cut taxes next year.

``As a result of a permanent review of the tax system, we would like to implement tax cuts, starting next year, that will be supported by the public, '' the premier said in Nagoya, central Japan, as he campaigned for upper house elections on Sunday. Optimism over prospects for permanent income tax cuts buoyed the market, analysts said.

``On the day, investors gradually priced in expected comments favorable to the market from Hashimoto,'' a broker with World Securities Co. Ltd. said.The key Nikkei stockaverage on the Tokyo Stock Exchange rose 114.69 points to End at 16,530.97, closing above the end-March finish of 16,527.17 points.

``The market has already priced in a lot of the good news on permanent tax cuts, but it needs firm details such as the size, and the timing, to be able to gain much more ground,'' a Meiko Securities Co. Ltd. broker said.

SINGAPORE: Singapore share prices ended 0.7 per cent lower as fears of a recession striking the city-state weighed on the market, dealers said.``The realisation of a recession continues to be reflected in the prices,'' said Chandra Mahawar, dealer with Deutsche Morgan Grenfell.

He said markets should most likely disregard Wednesday's announcement of a permanent tax cut by Japanese Prime Minister Ryutaro Hashimoto.

``The markets have been anticipating this for some time now. At best, there will be a knee-jerk reaction as current negative factors clearly outweigh the positives, '' he said.

The benchmark Straits Times Industrials index of the StockExchange of Singapore fell 7.40 points to close at 1,107.78 while the broader All-Singapore index was do wn 0.80 point to 309.13.

KUALA LUMPUR: Malaysian share prices closed 2.6 per cent lower in thin trading with sentiment undermined by the weaker ringgit amid rising fears of a recession, dea lers said.

``The market is just moving in sympathy with the ringgit. With volumes so thin, the market could swing either way,'' a dealer at a local brokerage said. The Kuala Lumpur Stock Exchange's 100-share weighted composite index ended at 455.28 points, down 12.27 points from Tuesday's finish. The dealer said the market would continue to take its cue from the local unit in the near term given the lack of fresh leads. The ringgit closed unchanged at 4.170 0 to the dollar.

``With the lower disposal income and people getting worried about being able to Repay loans and the likes, there is definitely a tinge of caution as far as participating in the stock market is concerned,'' he added.