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HONG KONG : Asian stocks soared on Wednesday after a big bounce on Wall Street as the US Federal Reserve slashed interest rates in a bid to contain a spiralling financial crisis and risk of recession.
But a dollar rally faded as traders took profit in the wake of the Fed's three-quarter point rate cut and better-than-expected earnings results from US investment banks Lehman Brothers and Goldman Sachs.
The central bank's move came amid what many analysts say is the worst financial crisis on Wall Street in decades, after a cash crunch caused venerable US investment bank Bear Stearns to implode.
Tokyo closed up 2.5 percent, Seoul rose 2.1 percent, Shanghai added 2.5 percent, Sydney surged 4.0 percent as Hong Kong gained 2.26 percent.
Wellington rose 1.42 percent, Taipei added 1.51 percent, Manila gained 1.56 percent and Kuala Lumpur was up 0.6 percent.
The US central bank cut its benchmark fed funds rate by 75 basis points to 2.25 percent on Tuesday, the lowest level in over three years.
The moves marked the latest in a multi-pronged effort by Ben Bernanke's Fed to keep credit flowing and markets functioning to avert a financial meltdown.
New York's Dow Jones Industrial Average soared 3.51 percent Tuesday.
But the market's gains could be short-lived.
Markets had been pricing in the likelihood of a full percentage point cut in the funds rate to inject more liquidity into the financial system which is battling a credit crunch related to the US housing downturn.
The dollar initially jumped following the more restrained move, but the rebound soon lost momentum.
Some Asian stock markets also ended off their highs of the day as optimism was tempered by lingering credit jitters. Bangkok fell 0.57 percent, Jakarta was down 0.7 percent and Singapore closed flat.
Japanese share prices closed up 2.48 percent after a US interest rate cut and better-than-expected banking results sparked a strong rally on Wall Street.
Dealers said a rebound by the dollar against the yen also eased worries about Japanese exporter earnings, helping stocks to rise for a second straight day.
The Nikkei-225 index gained 296.28 points to 12,260.44.
"With most of the bad economic news seemingly having already come out, stocks continued a technical rebound, and the Nikkei may rebound to around 13,000 points," said Yoshinori Nagano, chief strategist at Daiwa Asset Management.
Hong Kong share prices closed higher after the US Federal Reserve cut its key interest rate by 75 basis points, triggering a big rally on Wall Street.
But dealers said the local bourse's gains were capped as the benchmark index faced strong resistance at around the 22,000 points level.
The Hang Seng Index closed up 482.33 points at 21,866.94.
"Shares moved in line with the region, which reflected most of the positive news in the US, including the stronger-than-expected earnings from Lehman, and the Fed cut," said Patrick Yiu, associate director at CASH Asset Management.
"But the credit tightening in China is causing some uncertainty in the market, and that's why some investors are still cautious despite gains in the region," he said.
Australian share prices surged 4.0 percent, as financial stocks around Asia soared after the US Federal Reserve cut interest rates.
The S&P/ASX 200 gained 203 points to 5,289.1.
"Our market and across Asia has improved today based on the fact that the US had a strong rebound last night," said head of trading at Shaw Stockbroking, Jamie Spiteri.
"You can take some positives from today's move where gains have been sustainable throughout the day, which in the recent past would have subsided."
Chinese share prices closed 2.53 percent higher, rebounding from recent plunges after an overnight rally on Wall Street sparked by the Fed's latest rate cut.
Dealers said regional markets were encouraged after the Dow Jones Industrial Average rallied 3.51 percent as the Federal Reserve slashed interest rates by 75 basis points to offset a broadening credit crunch.
"Investor confidence was boosted after the Fed's move as it will help support the stressed banking sector following the near collapse of US investment bank Bear Stearns," said Wang Xiaoli, an analyst at Orient Securities.
"The move has also had a positive impact on regional markets and triggered a rebound today."
The Shanghai Composite Index rose 92.71 points to 3,761.61.
Taiwan share prices closed up 1.51 percent, led by Wall Street's overnight rally after the Federal Reserve cut interest rates.
The weighted index was up 121.53 points at 8,179.35.
Investors cashed out of tourism and transport shares that had advanced strongly on hopes that opposition Kuomintang candidate Ma Ying-jeou, who has promised better ties with China, will win Saturday's presidential vote.
"We couldn't fully hold on to our early gains mainly because of the presidential election," Mega International Investment Services assistant vice president Alex Huang said.
South Korean share prices closed 2.1 percent higher on continued bargain-hunting buoyed by Wall Street's strong rally.
Dealers said stocks rose sharply in early trade. But the market trimmed some gains towards the close as skittish investors opted to wait for more and clearer evidence that the global credit crisis is nearing an end.
The KOSPI index ended up 33.48 points at 1,622.23.
"Investors at first really cheered what happened in the US overnight, but caution was in the air in last-minute trading," said Lee Woo-Hyun, an analyst at Kyobo Securities.
Malaysian share prices closed 0.6 percent higher as regional markets rallied after the United States Federal Reserve slashed its key interest rate.
The composite index closed up 6.52 points at 1,186.54 as some cautious investors took profits ahead of a public holiday Thursday.
Koh Huat Soon, chief executive officer of Pacificmas Asset Management said Wednesday's rebound was externally-driven.
"The market is responding to the cut in the fed funds rate overnight," he said.
Koh, however, said investor confidence remained fragile following the selloff last week.
Thai share prices closed 0.57 percent lower as investors locked in profits despite a rally on Wall Street following a US interest rate cut.
Dealers said sentiment was positive in the morning session as investors took heart from the US Federal Reserve's widely-expected rate cut Tuesday.
But the market slipped in the end due to fears over the US economy.
The composite index fell 4.65 points to 807.67.
"The market rose in the morning but fell later as investors sold stocks on profit-taking," said Thanomsak Saharatchai, senior strategist at Capital Nomura Securities.
Indonesian share prices closed 0.7 percent lower as wary investors locked in gains from a strong but short-lived rally in early trade ahead of the long weekend.
The composite index closed down 16.23 points at 2,323.57.
"Before the strong rally this morning, the market had seen huge losses from recent sell-offs. That's why investors quickly locked in profits," said Andreas Yesakasih, a fund manager with Ciptadana Asset Management.
Indonesia failed to catch up with the rally in regional markets mainly because people believe foreign investors are still targeting to sell more local stocks after their stellar performance last year, he added.
Philippine share prices closed 1.5 percent higher, lifted by the overnight rally on Wall Street and the US Federal Reserve's cut in interest rates by 75 basis points.
But local investors quickly locked in early gains as they headed into a four-day Easter holiday break beginning Thursday.
Doubts also lingered about whether the latest aggressive measure by the Fed will do much to revive the ailing US economy.
The composite index gained 40.16 points at 2,817.58.
"Investors were looking at a bigger rate cut from the Fed, but a cut of 75 basis points is better than nothing and should help restore investor confidence," said Lawrence de Leon of Accord Capital Equities.
New Zealand share prices rose 1.42 percent, amid a positive reaction in world markets to an interest rate cut in the US.
The NZX-50 gross index rose 48.63 points to close at 3,467.26.
But the magnitude of the gains was "a bit disappointing" compared to stronger gains in other markets, Forsyth Barr broker David Price said.
He added, however, that the earlier falls had not been as sharp in New Zealand as in other markets, which have a stronger component of financial stocks. - AFP/ms
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