Signs that Japan may be slipping toward recession muted the effects of a rally on Wall Street to keep Asian shares in check Thursday.

Oil prices hovered near $100 a barrel in Asia, while the dollar weakened against the euro and the yen.

Japan’s Nikkei 225 slipped 0.1 per cent to 9,651.17 after the government announced that its earthquake-battered economy had contracted sharply in the first quarter, a result of the quake and tsunami on March 11 that hobbled the country’s industrial northeast, wiping out factories that produce crucial parts and supplies for the country’s manufacturers.

Real gross domestic product shrank at an annualised rate of 3.7 per cent in the January-March period, the second straight quarter that the world’s No. 3 economy has lost steam. Some economists say two consecutive quarters of contraction indicate recession, although there is no fixed definition. Other economists consider the depth of the decline and other indicators like unemployment.

Hong Kong’s Hang Seng rose 1 per cent to 23,241.43, with China Garments soaring 7 per cent.

Australia’s S&P ASX 200 rose 1.4 per cent to 4,757.90, with mining shares making notable gains. BHP Billiton, the world’s largest miner, was 1.5 per cent higher; Energy Resources of Australia jumped 2.1 per cent.

Singapore’s FTSE Straits Times Index was 0.6 per cent higher at 3,159.68 after the government raised its 2011 economic growth forecast. The Trade and Industry Ministry said it expects gross domestic product to expand between 5 per cent and 7 per cent, 1 percentage point more than the government’s previous forecast.

South Korea’s Kospi index slipped 0.2 per cent to 2,131.12, with tech shares such as Samsung Electronics down 0.4 per cent and Hynix Semiconductor slipping 0.8 per cent.

Airline shares also slid due to the rise in crude prices, which makes fuel more expensive. Hong Kong-listed China Southern Airlines plunged 4 per cent. Taiwan’s EVA Airways was 1.5 per cent down.

On Wall Street, widespread gains in commodity prices lifted energy and materials companies as part of a broad stock market rally Wednesday after three days of declines. Sentiment was also helped by the release of minutes from the Federal Reserve’s latest meeting that suggested the U.S. economy is improving.

The Dow Jones industrial average added 0.6 per cent to close at 12,560.18. The S&P index rose 0.9 per cent to 1,340.68. The Nasdaq composite gained 1.1 per cent to 2,815.

Benchmark crude for June delivery was up 20 cents to $100.30 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $3.19, or 3.3 per cent, to settle at $100.10 on Wednesday.

In currencies, the euro traded at $1.4303 from $1.4226 late Wednesday in New York. The dollar stood at 81.56 yen from 81.63 yen.

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