By Chao Deng

The Australian dollar touched its highest level in nearly seven weeks Wednesday after news of strong economic expansion, while shares in Hong Kong rose for a second-straight day on hopes for stimulus aimed at the Chinese property sector.

The Aussie dollar briefly hit 0.7342 against its U.S. counterpart earlier, its highest level since Oct. 15, after the Australian Bureau of Statistics said gross domestic product in the third quarter grew 0.9% quarter-over-quarter and 2.5% from a year earlier. The Aussie dollar has since pulled back to US$0.7304 and was trading at US$0.7321 late Tuesday in Asia.

The economic expansion was due to a surge in commodity exports and was in line with economists' forecasts.

"The Australian dollar was probably one of the most shorted [Asian] currencies around and now a lot of short positions have been taken out over the past month," said Steven Leung, a director at UOB Kay Hian in Hong Kong.

The GDP data and the fact that the Reserve Bank of Australia seems far from cutting interest rates have buoyed the Aussie dollar, he explained. The local dollar's strength comes even as iron ore reached a new decade-low on Tuesday. Iron ore is Australia's biggest commodity export.

Elsewhere, shares in the region were mostly weaker after sharp gains Tuesday, when disappointing Chinese manufacturing data spurred hopes of stimulus from Beijing.

Japan's Nikkei Stock Average slipped 0.3%, as the Japanese yen stayed roughly flat from late Asian trade Tuesday at Yen123.01.

Australia's S&P/ASX 200 fell 0.1% and South Korea's Kospi shed 0.6%. The Shanghai Composite Index was up 0.8%.

But Hong Kong's Hang Seng Index rose 0.4%, extending Tuesday's 1.8% rise, as investors continued to bet on help from Beijing for the property market.

China's official reading on factory activity slipped in November for the fourth-straight month, spurring expectations that the People's Bank of China could either cut interest rates or banks' reserve requirement ratios. The bank has already cut interest rates six times since November 2014.

Shares of China Vanke Co. Ltd., the country's largest property-developer, jumped 4.1% in Hong Kong and 6.1% in Shenzhen. The stock strengthened 7% and 10% on the respective exchanges on Tuesday. Shares of Poly Real Estate Group Co. Ltd. (600048.SH), another large Chinese developer, rose 4.6% in Shanghai, after also hitting the 10% daily up limit set by mainland authorities the previous day.

The Hang Seng China Enterprises Index gained 0.4% after jumping 1.6% the previous session.

Meanwhile, investors in the region are also weighing the prospects of additional stimulus from the European Central Bank on Thursday and the first interest-rate rise in years from the Federal Reserve later in the month.

In the U.S., investors snapped up stocks Tuesday ahead of key economic data and on expectations of ECB stimulus.

The futures markets on Tuesday pointed to a 75% chance of a rate increase this month, compared with 78% last week. A soft manufacturing report overnight from the U.S. renewed questions about the likely pace of Federal Reserve interest-rate increases over the next year. Friday's U.S. payrolls data could offer further clues on the Fed's course.

In Australia, energy shares were weaker amid nervousness in oil markets ahead of the Organization of the Petroleum Exporting Countries' meeting later this week. The sector was down 0.1% on the S&P/ASX 200.

Materials shares wavered, after iron ore tumbled 2.8% on Tuesday to US$41.60 a metric ton, according to The Steel Index. Other metal prices recovered. Copper prices rose to a one-week high Tuesday after Chinese copper producers announced supply cuts for 2016, although they remain down 27% this year.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

December 02, 2015 01:09 ET (06:09 GMT)