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TOKYO: Japanese share prices soared 3.59 percent in morning trade on Monday as a US federal takeover of ailing mortgage giants eased fears of a global liquidity crunch, dealers said.
The US government announced on Sunday it was seizing control of Fannie Mae and Freddie Mac, which account for trillions of dollars of home loans, in a massive bailout aimed at preventing further damage from the housing crisis.
Japanese banking shares, which have been weak in recent sessions, soared on the bailout, hoping it would help the flow of credit in the global financial system.
The Tokyo Stock Exchange's benchmark Nikkei-225 index gained 438.04 points to hit 12,650.27 by the end of the morning session. Asia's biggest bourse had closed Friday at a six-month low on weak US data.
Tokyo's broader Topix index of all first-section shares was up 46.49 points or 3.97 percent at 1,217.33.
Shares in Mitsubishi UFJ Financial Group, the world's largest banking firm by assets, shot up 87 yen or 11.60 percent to 837 yen in early trade.
"The US bailout announcement came just when Japanese bank stocks had been heavily sold and were waiting for short-covering to kick in," Credit Suisse analyst Shinichi Ina told Dow Jones Newswires.
"Recent selling in bank stocks was due more to concerns over the Japanese economy than to external factors, but selling on domestic factors had mostly run its course and investors had been waiting for any positive cues to emerge."
Hiroichi Nishi, general manager at Nikko Cordial Securities, likened the US government action Sunday to Japan's own bailout of its banks in the late 1990s, helping them overcome a crisis of bad loans.
The US bailout of the government-chartered but shareholder-owned mortgage firms also pushed up the US dollar against the yen – in turn boosting shares of Japanese exporters which benefit from a weaker domestic currency.
Shares in Toyota Motor Corp., Japan's largest automaker, jumped 220 yen or 4.63 percent to 4,970 yen.
- AFP/so
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