Asian stocks rallied the most in a year after the US Federal Reserve unexpectedly cut its discount rate, halting a global equities sell-off that erased more than US$5.5 trillion of market value.
Macquarie Bank Ltd had its biggest advance in a decade and Mizuho Financial Group Inc the largest in three months. Canon Inc and Samsung Electronics Co. climbed on reduced concerns the US economy will slow. Benchmarks in Australia, Hong Kong and South Korea surged the most in at least five years.
The Morgan Stanley Capital International Asia-Pacific Index added 3.9 percent to 142.43 at 4:08pm in Tokyo, climbing the most since June last year.
The measure lost 8 percent last week, the largest weekly decline in 17 years. The Dow Jones Industrial Average rose 1.8 percent on Friday, snapping a six-day losing streak, as the Fed reduced the rate at which it makes direct loans to banks by half a percentage point to 5.75 percent.
"It's a sentiment booster more than anything else," said Jason Lee, who helps manage US$1.4 billion at JMF Asset Management in Kuala Lumpur. "Volatility will still be there and we'll still be held ransom by the Dow."
The Nikkei 225 climbed 3 percent, the most in a year. Australia's S&P/ASX 200 Index and the Hang Seng Index both jumped 4.6 percent while the KOSPI climbed 5.7 percent. China's CSI 300 Index surged 5 percent to a record. The Philippines was closed for a holiday, while all other markets rose.
BHP Billiton and PetroChina Co. advanced in tandem with metals and oil prices as the Fed's rate cut eased concern raw materials demand will cool.
Concern about a widening credit crisis, sparked by rising defaults on US home loans, prompted investors to shun equities in the past month. About one-tenth of stock-market capitalization was wiped out globally after July 23, when the value of listed companies peaked at US$59.8 trillion.
Macquarie jumped 9.3 percent to A$70.75 (US$56.86), the most since October 1997.
Australia's largest securities firm said this month investors in two of its leveraged credit funds may lose 25 percent of their money because of turmoil in credit markets.
Mizuho, Japan's second-largest bank, rose 5.1 percent to ¥664,000 (US$5,765).
Yesterday's rebound added to speculation investors will have more confidence to borrow the yen to buy higher-yielding assets, helping weaken Japan's currency. The yen fell to 114.63 per dollar from 114.36 late in New York on Friday.
Fed policy makers, in a statement released after the discount rate reduction, said they are "prepared to act as needed to mitigate the adverse effects on the economy arising from disruptions in financial markets."
Last week's rate cut marked the first time the Fed has cut borrowing costs between scheduled meetings since 2001.
HSBC Holdings Plc, Europe's biggest bank, rose 2.1 percent to HK$138.70 (US$17.74) in Hong Kong. Kookmin Bank, South Korea's largest, gained 3.1 percent to 74,100 won (US$78.65).
Meanwhile, Europe's main stock markets recovered further yesterday, lifted by the Asian rebound.
London's FTSE 100 index of leading shares jumped 1.62 percent to 6,162.40 points in morning trade. Frankfurt's DAX 30 gained 0.85 percent to 7,441.27 points and in Paris the CAC 40 increased 1.31 percent to 5,434.02.
The DJ Euro Stoxx 50 index of eurozone shares climbed 1.11 percent to 4,203.31 points.