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Shares across Asia rose Wednesday as oil prices advanced to their highest levels in more than seven months, while investors appeared to be more upbeat about the prospect of a U.S. interest-rate increase after the release of strong economic data there.

Stocks in Hong Kong were up 2.5%, led up by state-owned energy companies such as PetroChina Co., which surged more than 4.3%. Energy stocks on the benchmark Hang Seng Index gained 3.4%.

Elsewhere, Japan's Nikkei Stock Average rallied by 1.8%, while Australia's S&P ASX 200 was up 1.8% and South Korea's Kospi was up 1.1%. The Shanghai Composite Index edged up 0.3%.

Crude-oil prices, which rose overnight and continued to tack on gains in the Asia trading day, jolted the region's markets. Analysts were watching for a possible break above $50 a barrel, a level that for months hasn't been challenged amid worries about a global glut.

Also underpinning Asia's gains was robust U.S. housing data Tuesday, indicating a strengthening domestic economy that would allow room for the Federal Reserve to tighten monetary policy as early as June. Sales of new homes in the U.S. rose at the fastest pace in more than eight years in April, helping drive the S&P 500 to finish up 1.4%, its biggest gain in more than two months.

Still, traders in Asia viewed Tuesday's gains with skepticism.

"I still expect increased volatility in early trades," said Andrew Sullivan, managing director at Haitong International Securities.

"Expect the market to drift lower" and traders to short the market again, he said, referring to the recent rise in negative bets on the Hang Seng Index.

The MSCI Asia Pacific benchmark of stocks has slumped nearly 5% from late April as a rising U.S. dollar rattles investments in many commodities and emerging-market assets. In Hong Kong, daily trading volumes have fallen to their lowest levels this year on uncertainties over the pace of U.S. rate increases.

In Japan, shares of Sony Corp. surged 7% despite the company's forecast Tuesday that its core image sensor business would record a deeper loss this fiscal year.

A move to stop making high-end camera module components for external customers will likely remove uncertainties from the company's business portfolio. With its gaming and music businesses remaining strong, Sony is on track to achieve a ¥ 500 billion ($4.54 billion) operating profit milestone in the next fiscal year, ending March 2018, analysts said.

In China, the central bank Wednesday guided the yuan to its weakest level against the U.S. currency in more than five years, reflecting a stronger dollar overnight. The weaker fixing helped cap gains in Shanghai stocks, which had been up as much as 0.8% earlier in the morning.

The dollar has now reached its highest level in two months. Analysts said the yuan would come under renewed depreciation pressure as expectations build for the Fed to resume raising interest rates.

Takashi Mochizuki and Gregor Stuart Hunter contributed to this article

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

(END) Dow Jones Newswires

May 25, 2016 00:45 ET (04:45 GMT)

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