Stocks up on rate cut hopes

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Gold also hit a record above $945 an ounce, and silver touched a 27-year high, as funds poured into a wide range of commodities, betting they will outperform in an environment where growth is slowing and prices are rising.

Data on Wednesday showed a faster-than-expected rise in U.S. consumer prices last month and further weakness in the housing market there.

"The U.S. is entirely focused on the economic data that is coming out and we're getting revised forecasts for their economic growth in the downward trend," said Savanth Sebastian, equities economist at CommSec in Sydney. "(The Federal Reserve) will have to cut rates and the possibility of that is boosting sentiment."

The weak housing market and problems in the credit market prompted the Fed to lower its 2008 U.S. economic growth forecasts on Wednesday, with analysts interpreting comments as paving the way for further reductions in borrowing costs.

Japan's benchmark Nikkei rose 2.1 percent, trimming most of Wednesday's losses, while MSCI's index of other Asian stocks gained 1.2 percent by 0247 GMT.

Since tumbling more than 10 percent in January, Asia stocks have endured choppy, volatile trade and investors are wary of calling an end to that.

"It's like a Japanese saying about a winter season around this time; three cold days and four warm days," said Katsuhiko Kodama, senior strategist at Toyo Securities.

Taiwan stocks rose 1.6 percent, in line with Hong Kong, but Shanghai fell more than 2 percent on concerns about further new share issues flooding the market.

Australian stocks added 1 percent, helped by solid earnings from phone company Telstra, pallet maker Brambles and national carrier Qantas.

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