Asian markets rally on easing concerns

A Japanese businessman walks past rising stock prices on a Nikkei stock index board in Tokyo's Marunouchi financial district yesterday. Tokyo stocks snapped a five day losing streak in yesterday's trading, gaining 202.25 points, to finish at 16,844.50. PHOTO: EPA

Many Asian stock markets rallied yesterday, reversing a weeklong sell-off triggered by worries of a global slowdown and fanning hope that international trading turmoil may finally subside.

US Treasury Secretary Henry Paulson, in Tokyo for a three-nation Asian tour, tried to quell concerns about markets saying the global economy is as strong as he's ever seen and that reforms in China would help lessen market volatility.

The Tokyo Stock Exchange, the region's biggest bourse, led the turnaround with its benchmark Nikkei 225 index climbing 202.25 points, or 1.22 percent, to finish at 16,882.92 points and end five straight days of losses that had seen the market plunge more than 8 percent, while the broader Topix was up 1.8 percent to book its biggest one-day percentage gain since October.

Sydney's S&P/ASX 200 closed 2.06 percent higher as BHP, the world's biggest miner, rose 2.7 percent and rival Rio Tinto added 1.9 percent.

Hong Kong's Hang Seng index rose 1.58 percent and Singapore's Straits Times gained 1 percent. Taiwan's benchmark TAIEX closed up 1.45 percent, South Korea's KOSPI rose 2 percent, and Malaysia's benchmark Kuala Lumpur Composite Index bounced back 2.2 percent.

The Shanghai Composite index, the epicenter of last week's market meltdown, rose 1.97 percent to close at 2,840.18.

Investors back to the market, scooping up shares after days of losses and renewed confidence that underlying economic fundamentals are basically stable.

On Wall Street on Monday, US stocks fell after trying to steady themselves.

In Tokyo, Paulson tried to bolster confidence by saying the US and global economy are strong and that stock market volatility is inevitable.

"The global economy is more than sound. It's as strong as I've seen in my business lifetime," Paulson said after meeting Japanese officials in Tokyo.

"Markets very seldom move in a straight line," said Paulson, who was scheduled to later head to South Korea and then China. "You are always going to have volatility."

Many had seen the sell-off as a healthy correction for markets that had risen too far, too fast. China's market had doubled in value last year, for example. Malaysian stocks had surged 17 percent this year until the plunge.

Some however, warned the volatility in global markets over the past week may not have run its full course.

"My feeling is we probably do have more downside, and what we're seeing now is a bounce from oversold conditions," said Sydney-based Shane Oliver, head of investment strategy at AMP Capital Investors.

The US dollar and the euro rebounded from three-month lows against the yen, as stock market gains helped stem a rush by investors to cash out of riskier assets and pay off the cheap yen loans that had funded them.

"The stock market is showing signs of some stability and spurring short-covering, which has spilled over to the currency market," said Shogo Nagaya, a senior trader at Nomura Securities. "It's premature to say the markets have bottomed out until we see full-fledged investor buying in both the stock and currency markets, but at least we feel the worst is over."

The US dollar bought around ?116.40 at 6.10am GMT, up more than ?1 from the day's lows as it pulled away from the three-month low of ?115.16 it touched on Monday.

The euro was trading at around ?152.55, rebounding sharply from a three-month low of ?150.74.