NTDOY Nintendo Co Ltd (PK)

Japanese stocks rose to their highest levels in two months on Thursday, amid hopes that the Bank of Japan will announce fresh easing measures, although gains were capped after the U.S. Federal Reserve signaled it could raise interest rates as soon as December.

The Nikkei Stock Average was up 0.6% at 19015.51, reaching its highest level since late August. Many economists expects that Japan's central bank will expand its already massive government bond-buying program at its policy meeting Friday.

"A lot of people have bought Japan in the past few weeks in anticipation of [Friday's meeting]," said Ilya Feygin, managing director at New York-based brokerage WallachBeth Capital.

Elsewhere, Australia's S&P ASX 200 was down 0.3% and South Korea's Kospi was up 0.6%.

U.S. Fed officials suggested they had become less concerned in recent weeks about turbulence in financial markets and uncertain economic developments overseas. They pointed specifically to the next meeting as a time when they would assess if it was time to raise rates.

Markets around the world have rallied this month on hopes that the Fed would keep rates lower for longer, while the prospect of further stimulus from central banks in Europe and Asia also fueled gains. In September, the Fed left short-term rates unchanged amid worries about weak growth overseas and concerns about exceptionally low inflation at home.

The MSCI Asia Pacific Index, up 9.3% for the month as of Wednesday's close, is on track for its best month since April 2009.

Still, Mr. Feygin noted that region's markets have lost steam in the past week. "The Fed was a bit more hawkish than people expected."

The Shanghai Composite Index was down 1.1% this week as of Wednesday's close, even after the People's Bank of China cut interest rates last Friday.

"It shows that central banks are an important factor but not all that powerful…and that markets in China especially need something more," added Mr. Feygin.

Overnight, U.S. stocks rebounded to new highs after the Fed held rates near zero.

In Japan, signs of weakness in the economy are pressuring the Bank of Japan for more stimulus, a move that would be part of a now two-year-long fight to spark inflation.

Still, Bank of Japan Governor Haruhiko Kuroda hasn't given a public indication that he believes further easing action is necessary now, instead saying the bank can still achieve the bank's 2% inflation target next year.

The Japanese yen was up 0.3% at 120.66 to one U.S. dollar.

The Malaysian ringgit was down 0.7% at 4.2950 to one U.S. dollar. The dollar strengthened broadly against global currencies following the Fed's statement.

Shares of Nintendo Co. were recently up 0.9%. After the market's close Wednesday, the company said its operating profit for the April-to-September period totaled ¥ 8.98 billion ($74.6 million), buoyed by its core game business and game-interactive figurines and cards. The gains were a turnaround from a year-earlier loss of ¥ 215 million, though analysts expected a profit of ¥ 14.4 billion.

In Australia, shares of Woolworths Ltd. fell 8.4% after the supermarket operator warned that first-half profit may fall as much as 35%, as it cuts prices and accelerates investments to compete with rivals. The company expects after-tax profit of between 900 million Australian dollars (US$639 million) and A$1.0 billion in the six months through December, which is 28% to 35% lower than a year earlier, excluding significant items.

Brent oil was up 0.1% at $49.12. U.S. oil prices jumped 6.3% overnight, the largest one-day percentage gain since Aug. 31.

Gold prices were down 1.5% at $1158.60.

Takashi Nakamichi and Rebecca Thurlow contributed to this article.

Write to Chao Deng at Chao.Deng@wsj.com

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(END) Dow Jones Newswires

October 28, 2015 21:45 ET (01:45 GMT)

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