Japan's stock benchmarks rose, having their biggest gain in two weeks. Companies that rely on domestic sales such as NTT DoCoMo Inc. led the advance on optimism a government report tomorrow may show economic growth accelerated in the second quarter.

The Nikkei 225 Stock Average advanced 1.7 percent to 9487.80 at the 3 pm close in Tokyo. The Topix index gained 1.2 percent to 928.52. Machinery makers such as Komatsu Ltd. rose after a government report on Friday showed the nation's machinery orders climbed. Both benchmarks had their biggest rally since July 28.

``Encouraging signs that economic growth is recovering is definitely positive for the stock market,'' said Wilfrid Pham, who helps manage about $1 billion at HSBC Asset Management Japan in Tokyo. Pham holds companies that rely on consumer demand, which he declined to name.

Elsewhere in Asia, Hong Kong's Hang Seng Index advanced. HSBC Holdings Plc led gains in banks after the Hong Kong Economic Times said China may set up rules as early as December to make the city its center for offshore yuan business.

Taiwan's TWSE Index declined for a fifth day in six, shedding 0.3 percent. United Microelectronics Corp., the world's second- largest supplier of made-to-order semiconductors, led the drop after saying July sales fell from the previous month.

South Korea's Kospi index added 0.1 percent. Hyundai Motor Co., the nation's largest automaker, advanced after it said second- quarter profit surged 86 percent from the same period a year earlier.

Benchmarks in Malaysia, Australia and Indonesia fell, while all other major indexes in the region gained or were little changed.

Recovery Signs

Signs of an economic recovery may help the Nikkei extend its 23 percent gain since it reached a 20-year low on April 28. The Japanese economy, the world's second-largest, probably expanded 0.2 percent from the first quarter, according to the median forecast in a Bloomberg News survey.

DoCoMo, Japan's largest mobile-phone operator, added 2.1 percent to 286,000 yen. It was the biggest gainer on the Topix. Seven-Eleven Japan Co., Japan's largest convenience store chain, added 2.6 percent to 2,950 yen.

Trading may be lower than average this week as Japan enters the traditional ``Obon'' summer holiday, some traders said. Some 590.6 billion yen ($4.98 billion) in shares traded, down 29 percent from the daily average of 835.7 billion yen in the past three months.

``Unless we see drastic moves in the overseas market,'' the Nikkei may trade between 9200 and 9500 because of the summer holiday, said Shigemi Nonaka, chairman of Polestar Investment Management Co., which manages the equivalent of $35 million

Machinery Orders

Machinery makers extended gains after a government report, released an hour before the market closed on Friday, showed that the nation's machinery orders rose 2.4 percent in June from the previous month. Some economists surveyed by Bloomberg News expected a 3.8 percent decline.

Komatsu surged 6.9 percent to 605 yen. The world's No. 2 maker of construction equipment said Friday its first-quarter net income rose to 3.74 billion yen from 636 million yen a year earlier, aided by a doubling of sales to China.

Iwatsu Electric Co., the Japanese telecommunication equipment maker, surged 17 percent to 197 yen. It was the biggest gainer by percentage points on the exchange's first section.

Furukawa Electric Co. slid 4.4 percent to 368 yen. The Japanese maker of fiber-optic cable said this afternoon it more than doubled its full-year loss forecast to 72.9 billion yen from 32.6 billion yen.

China Connection

The Hang Seng Index gained 1 percent to 10,047.39. Hang Seng futures for August delivery jumped 1.4 percent to 9977.

HSBC, which controls two of the city's largest lenders, gained 0.8 percent to HK$96.75 and was the most active stock by value. BOC Hong Kong (Holdings) Ltd., the unit of China's second- biggest bank, climbed 1.2 percent to HK$8.35.

China's new rules will allow local banks in Hong Kong to start dealing in yuan, the Hong Kong Economic Times said. As trade and tourism between China and Hong Kong grow, there is as much as HK$70 billion ($8.97 billion) of yuan in circulation in Hong Kong, the report said.

``That would be additional source of revenue'' for Hong Kong's banks, said Bich Pham, a managing director at TAL CEF Global Asset Management Ltd., which manages $800 million in global and Asia equities. The growth in China ``can not be ignored.''

`Feeble Recovery'

The TWSE shed 17.95 to 5214.60. The benchmark has lost 3 percent since Aug. 4. Index futures expiring in August gained 0.9 percent to 5251.

United Microelectronics lost 1.3 percent to NT$22.2. The company said July sales were NT$7.01 billion ($203.4 million), compared with NT$7.03 billion in June. Taiwan Semiconductor Manufacturing Co., its bigger rival, dropped 1.7 percent to NT$57.

``United Microelectronics' latest sales report showed a feeble recovery in the semiconductor industry,'' said Simon Chao, who manages $17 million at President Investment Trust Corp. in Taipei.

South Korea's Kospi added 0.44 to 704.58 in Seoul. Kospi 200 futures for September gained 0.2 percent to 90.50, while the underlying index rose 0.2 percent to 90.39.

Hyundai Motor gained 1.2 percent to 33,000 won after it said second-quarter profit surged as the company sold more Grandeur XG sedans, Santa Fe sport-utility and other pricier vehicles in overseas markets. Net income jumped to 571 billion won ($484 million) in the three months ended June 30.

LG Card Co., the nation's largest credit-card company, fell 3 percent to 18,050 won on concern that slower consumer spending may reduce earnings at finance-related companies. South Korean credit card spending during the second quarter fell 28 percent from a year ago because of slowing domestic consumption, the Korea Herald said.

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