KUALA LUMPUR (Oct 4): The FBM KLCI rose 8.7 points or 0.5% as Japan share gains led Asian equities higher. Japan shares rose on a weaker yen as US interest rate hike expectation strengthened the US dollar.

At Bursa Malaysia, the KLCI closed at 1,661.25 points as investors played catch-up after the local market was closed yesterday to observe the Islamic calendar's new year.

"The KLCI was down from the high this morning, when investors played catch-up from the long holiday," Inter-Pacific Securities Sdn Bhd research head Pong Teng Siew told theedgemarkets.com over telephone.

Across Asia, Japan's Nikkei 225 climbed 0.83% while Hong Kong's Hang Seng gained 0.45%. China markets are closed this week for the National Day holidays.

Reuters reported that Asian shares shrugged off a sluggish start and pushed higher on Tuesday, with Japanese markets leading the way after an upbeat US manufacturing survey bolstered the dollar.

The upbeat US factory numbers had a mixed impact on US shares overnight. While strong survey reassured investors worried about the strength of the US economy, it also encouraged bets that the Federal Reserve will raise interest rates as early as this year. Higher rates, while good for the dollar, could pressure equities markets.

Japan's Nikkei stock index gained, getting a tailwind as the dollar rose against the yen after strong US data.

Across Bursa Malaysia, 1.49 billion shares valued at RM1.94 billion were traded. A total of 408 counters ended higher while 398 fell.

The top gainer was Dutch Lady Milk Industries Bhd while the biggest decliner was Panasonic Manufacturing Malaysia Bhd. Borneo Oil Bhd was today's most-active counter.