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Text by AFP

Latest update : 2008-10-28

Markets in Japan and Hong Kong recouped some of the heavy recent losses. Hong Kong was up 14.4%, after losing 12.7% the previous day, leading European markets to open up.

Asia's battered stock markets rallied Tuesday after several days of heavy losses as investors hunted for bargains despite continued worries about the ailing global economy.
Most markets around the region bounced back from an early sell-off, helped by a big rebound in Hong Kong, where stocks were up more than 11 percent in the afternoon, after losing 12.7 percent on Monday.
Tokyo ended with a gain of 6.4 percent as the yen fell sharply and investors hunted for bargains after the Nikkei index tumbled to a 26-year low. Seoul rose 5.6 percent and Shanghai firmed 2.8 percent.
"The equity market was massively oversold and a rally was due," said RBS Securities analyst John Richards.
But some markets missed the rebound, with Sydney ending down 0.4 percent.
The yen, which has soared in recent weeks as people dump risky investments, dropped below 95 to the dollar and 120 against the euro, providing some much-needed relief to Japanese exporters.
Last week the dollar fell to the upper 90-yen level for the first time since August 1995, while the euro hit a six-year low below 114 yen.
Investors were hoping for further action from the US Federal Reserve to calm skittish markets.
The Fed, which led a coordinated global rate cut earlier this month that pushed its target rate down half a point to 1.50 percent, is seen as trimming its key rate again at the two-day meeting due to start later Tuesday.
Japan meanwhile imposed a ban on naked short selling of stocks to try to stabilise Asia's largest bourse.
"I decided on the measure because these few days will be critical and stock exchanges are facing risks unless we take quick action," Finance Minister Shoichi Nakagawa told reporters.
Short sales involve selling borrowed shares in the hope of buying them back later at a cheaper price to make a profit. With naked short-selling, traders sell stocks before even borrowing them.
Despite the strong rebound, markets are still down sharply since the start of the year. The Nikkei has lost 50.2 percent in 2008 while Hong Kong's Hang Seng is about 55 percent lower.
Some analysts warned markets could fall further before reaching a bottom.
"Global equities will trend downwards until they reflect a deep global recession," said Dariusz Kowalczyk, chief investment strategist at CFC Seymour in Hong Kong.
"As long as US equities are going down, so will all other stock markets," he warned.
Amid the continuing turmoil, Japan's top broker Nomura Holdings, which is buying the Asian and European operations of failed Wall Street bank Lehman Brothers, said it made a half-year net loss of 149.5 billion yen (1.57 billion dollars).
US stocks ended lower Monday despite news that the US Treasury was preparing to inject some 125 billion dollars into nine major banks this week as part of a massive rescue plan.
The Dow Jones dropped 2.42 percent overnight to end at 8,175.77, while the broad-market Standard & Poor's 500 index lost 3.18 percent to 848.92.

Date created : 2008-10-28