STOCK MARKET

Asian stocks at seven-week high

3 min

Asian stock markets mounted a strong rally Wednesday, tracking an overnight surge on Wall Street as investors hoped the worst of the global credit crisis was over.

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Asian stock markets mounted a strong rally Wednesday, tracking an overnight surge on Wall Street as investors hoped the worst of the global credit crisis was over.

Tokyo and Hong Kong were each up more than four percent and other markets were deep in positive territory, bringing relief across Asia after a punishing first-quarter 2008.

The advance came after all US benchmarks rose more than three percent on Tuesday, when US investment bank Lehman Brothers and Switzerland's UBS announced well-received new share issues to prop up their balance sheets.

"It is more a sign of confidence that perhaps the tightness in the credit markets may be abating," said Matt Lewis of CMC Markets in Australia, where share prices closed up 2.6 percent at the highest level in a month.

"The news from Lehman Brothers Holdings and UBS has helped create the view that the worst is over," said Akio Yoshino of Societe Generale Asset Management in Japan.

Tokyo closed up 4.2 percent, while Hong Kong was ahead 4.4 percent at midday. Seoul gained 2.4 percent, Taiwan added 2.2 percent and Manila moved up 2.6 percent -- the biggest one-day gain in the Philippines since January.

Bucking the trend, Jakarta and Malaysia were both down in mid-session.

After months of turmoil set off by the subprime mortgage mess in the United States, there were initially fears of another shockwave on Tuesday when UBS announced it was taking a 19-billion-dollar subprime-related writedown.

But market sentiment that the bank had dealt cleanly with the setback and that a new issue was welcomed, combined with a positive response to the Lehman Brothers offering, pushed US and European bourses ahead overnight.

The FTSE 100 in London gained 2.6 percent, the CAC 40 in Paris shot up 3.4 percent and the Frankfurt Dax added 2.8 percent.

In the United States, the blue-chip Dow Jones Industrial Average picked up 3.2 percent in one of its largest-ever point gains.

The tech-heavy Nasdaq jumped 3.7 percent and the Standard & Poor's 500 surged 3.6 percent.

"Worries about the global credit market and the health of the US economy had been stifling investors," said Kim Sung-Bong, an analyst at Samsung Securities in Seoul.

"Now that those concerns are easing gradually, the market is staging a relief rally, which is quite natural."

The Asian Development Bank said on Wednesday that growth in Asian economies excluding Japan would cool to 7.6 percent this year, down from last year's 19-year high of 8.7 percent.

"While Asia is not immune to a global slowdown, neither is it a hostage to what is happening," said the bank's chief economist, Ifzal Ali.

But the bank cautioned that inflation would hit decade-high levels.
  

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