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Stocks soar worldwide amid government rescue plans

Global equity markets soared yesterday, lifted by mammoth share price gains for banks, as governments worldwide stepped up their fight against the worst financial crisis in decades, traders said.

In Taipei, the benchmark TAIEX rose 328.43 points, or 5.82 percent, at 5,970.38, off a low of 5,858.19 and a high of 5,982.64, on turnover of NT$105.33 billion (US$3.27 billion).

The Taipei market opened sharply higher and the momentum continued until the end of the session on hopes the US will establish an agency similar to that set up in the 1980s that put a stop to the savings and loans crisis, dealers said.

Market sentiment has also improved after the government said it would step in with its National Stabilization Fund, they said.

Hong Kong shares closed up 9.6 percent to 19,327.73, Japan’s shares rose 3.76 percent to 11,920.86 and South Korean shares closed 4.6 percent higher at 1,455.78.

The Shanghai market soared by nearly 9.5 percent, also after China abolished a tax on stock transactions, hoping to reverse a slide on the bourse that threatened to affect millions of middle-class Chinese.

Singapore shares made their biggest one-day gain in more than a year to close 5.78 percent higher, Australian shares rebounded to close up 4.3 percent and Thai share prices ended 4.07 percent higher.

“The rally is a combination of a knee-jerk reaction to the reports of the new rescue plan and a mere tracking of movement on Wall Street,” said Seiichi Suzuki, market analyst at Tokai Tokyo Securities. “Market participants are also looking at key futures indexes on Wall Street, because it is hard for players in Asia to digest fully the impact of the latest developments related to the global credit crisis.”

Meanwhile, the European Central Bank and Bank of England each lent an additional US$40 billion to financial institutions struggling to obtain funds.

In early European trade yesterday, London surged 6.88 percent, Paris gained 5.40 percent and Frankfurt rallied by 3.87 percent.

British bank HBOS, which on Thursday was rescued by a peer, Lloyds TSB, saw its share price spike 35 percent on London’s FTSE 100 index.

“The creation of a huge government sponsored vehicle to take on so-called toxic investments in the US, short selling restrictions in the UK and incentives to encourage investing in equities in China are all having a positive effect on markets,” CMC Markets dealer Matt Buckland said.

“The combined efforts are so great that there seems to be a coherent belief that this could actually be sufficient to draw a line under what has been a tumultuous 18 months for the markets,” he said.

Stocks also got a boost after British and New York state authorities temporarily banned short selling.

Meanwhile, Russian shares rocketed yesterday after highly volatile trading following an injection of billions of dollars by the government aimed at staving off a massive financial crisis.

The main RTS index soared 15.5 percent and the MICEX shot up 23 percent just after being suspended earlier in the day for rising too quickly following the sharpest falls in a decade earlier this week.

Also See: China weighs Wall Street’s dangers and opportunities

Also See: TAIEX makes dramatic reversal
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