New Zealand shares bounced from a four-week low yesterday as investors shrugged off the negative headlines in Europe, where the region's bail-out fund was downgraded, and embraced better than expected economic growth in China. Dual-listed Australian stocks paced gainers.

The NZX 50 Index rose 24.17 points, or 0.8 per cent, to 3234.8, recouping all of Monday's loss. Within the index, 36 stocks rose, nine fell and five were unchanged. Turnover was $66.7 million.

That followed gains across Asian stock markets as investors got a boost from 8.9 per cent expansion in China's fourth quarter gross domestic product, and ignored Standard & Poor's decision to cut the rating on the European Financial Stability Fund one notch to AA+ after the mass downgrade of nine of the region's sovereign nations.

In late trading, Australia's S&P/ASX200 index was up 68 points, or 1.65 per cent, at 4215.6, Japan's Nikkei 225 index gained 0.7 per cent to 8438.21, and Hong Kong's Hang Seng advanced 1.9 per cent to 19,369.91.

"Markets took the material downgrade for a region relatively in their stride," said James Lindsay, equities manager at Tyndall Investment Management.

"It's no news that quite a number of European sovereigns are starting to have a little bit of trouble."

Dual-listed stocks paced the benchmark index, with food ingredients maker Goodman Fielder leading the exchange higher, up 11 per cent to 60c.

Australian phone company Telstra gained 3.1 per cent to $4.38, while financial services firm AMP rose 2.8 per cent to $5.60, and lender ANZ Banking rose 1.4 per cent to $27.38.

Lindsay said Australia's economy had been under pressure in recent months, and retailers had been "hit really quite hard" over the past six months. Government figures yesterday showed retail spending on credit and debit cards slipped a seasonally adjusted 0.2 per cent last month.

Shares in discount retail chain The Warehouse gained 2 per cent to $3.11, while Kathmandu rose 2.5 per cent to $1.66. Hallenstein Glasson was unchanged at $3.55, while Pumpkin Patch fell 1.5 per cent to 67c.

Shares in governance software firm Diligent Member Services hit a record high $2.50 during trading yesterday, before closing at $2.41, a daily gain of 2.6 per cent.

OceanaGold was the biggest decliner on the benchmark index, falling 3.3 per cent to $2.94, while PGG Wrightson fell 2.7 per cent to 36c.

Index heavyweights were mixed, with power company Contact Energy falling 2.7 per cent to near a five-month low at $4.88, while Telecom rose 0.8 per cent to $1.995 and construction company Fletcher Building gained 1 per cent to $5.94.