HONG KONG (AFP) -- Japanese investors shrugged off an economic contraction to propel stocks more than 5 percent Monday, leading an Asia recovery after last week's horror show.

But Shanghai tumbled on its first day back from the Lunar New Year holiday and after data showed another fall in Chinese exports and imports last month, yet another sign of trouble in the world’s No. 2 economy.

The broad gains across the region came after a surge in New York and Europe on Friday fuelled by a rally in oil prices and bargain-buying. Upbeat readings on German growth and US retail sales also provided some support.

However, analysts said the gains were unlikely to be sustained for a long period, with the concerns that have wiped trillions off markets already this year -- including the weak global economy and China's slowdown -- still unresolved.

“Shares have become oversold again and due for at least a bounce which may now be getting under way,” Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors, told Bloomberg News.

“But with global growth worries remaining, it’s still premature to say that shares have bottomed.”

Tokyo ended the morning session 5.1 percent higher after losses of more than 11 percent last week, fuelled by a surging yen as dealers fled into safe-haven investments.

They also came despite news that the economy shrank 1.4 percent in the final quarter of last year, dealing another blow to Prime Minister Shinzo Abe's faltering attempts to kickstart growth and ramp up inflation. For the whole year growth was a measly 0.4 percent.

And experts said with the yen continuing to rise on the back of global economic anxiety, the outlook was poor for Abe’s plans.



“(The stronger yen) will lower corporate profits and could reduce firms' willingness to lift wages, thus further delaying the pick-up in earnings required to hit the Bank of Japan’s inflation target,” said Marcel Thieliant from research house Capital Economics.

Hong Kong was up more than 2 percent, Sydney gained 1 percent and Seoul 1.4 percent. Singapore piled on 1.9 percent.

Shanghai -- which has lost more than a fifth of its value alone this year owing to its growth slowdown and faltering yuan currency -- was 1.6 percent off in mid-morning trade.

However, the losses were limited considering traders were playing catch-up with last week's bloodbath across world markets and after the latest weak trade figures.

Customs data showed Monday that exports tumbled 6.6 percent year-on-year as the struggling manufacturing sector continued to act as a millstone on the economy, while imports plunged 14.4 percent.

The broad-based Asia rally tracked advances on Wall Street and across Europe, where traders welcomed data showing the German economy grew a solid 0.3 percent in the fourth quarter, and US retail sales picked up 0.2 percent.

Energy firms were also boosted by a more than 10 percent surge in oil prices Friday as a report fanned hope that the OPEC producers club would agree to talks on output cuts to stabilize the volatile market.

In Hong Kong CNOOC was 2.4 percent higher and PetroChina added 2 percent.

Sydney-listed Woodside Petroleum was 3.4 percent up and miner BHP Billiton put on more than 6 percent.