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Asia stocks up but gain limited on China concerns

Asian stock markets were mostly higher on Thursday, but their gains were modest amid speculation that China may raise interest rates ahead of the Lunar New Year holiday next week in a bid to rein in inflation.

The Shanghai Composite Index edged up 0.1 percent to 2,712.63. Hong Kong's Hang Seng index gained 0.3 percent to 23,909.21.

Japan's Nikkei 225 stock average climbed 27.52 points, or 0.3 percent, to 10,429.42 in the morning session.

"Overall, sentiment in Asia was sluggish. Investors were jittery as China may again increase interests rates ahead of Chinese New Year holiday," said Yutaka Miura, senior strategist at Mizuho Securities Co. Ltd.

China's leaders, mindful of the political turmoil brought on by previous bouts of inflation, have declared curbing price increases a top priority. They have hiked interest rates twice in the past four months and repeatedly tightened investment curbs to keep inflation from spreading throughout the economy.

Elsewhere, South Korea's Kospi added 0.3 percent to 2,115.95. But shares in Australia and Singapore were lower.

In early trading, Asian stocks were firmer after the Dow Jones industrial average briefly broke through the 12,000 mark for the first time in two and a half years, with investors cheering President Barack Obama's calls for lower corporate tax rates.

On Wall Street overnight, the Dow briefly broke through 12,000 for the first time since June 2008 after Obama said in his State of the Union address late Tuesday that he wanted to close corporate tax loopholes and use the additional revenue to lower tax rates on businesses for the first time in 25 years.

The Dow slipped lower in afternoon trading to close at 11,985.44 Wednesday, up 0.1 percent from a day earlier.

In currencies, the dollar fell to 82.04 yen in Tokyo Thursday from 82.19 yen in New York late Wednesday. The euro was flat at $1.3710.

Benchmark oil for February delivery rose 22 cents to settle at $87.55 a barrel on the New York Mercantile Exchange.