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Asian shares rise on Wall Street gains

Stock traders negotiate in the spot dollar pit before closing time on Monday at the Mercantile & Futures Exchange in Sao Paulo, Brazil. Brazil and US stock markets extended their rally as an increased takeover price for troubled investment bank Bear Stearns was announced, easing concerns about a financial sector meltdown. PHOTO: AFP

Asian markets rose strongly yesterday as investors returned from the Easter holiday in a mood to buy, encouraged by upbeat US housing numbers and overnight gains on Wall Street.

Markets in Hong Kong and Australia, both of which were closed since Thursday, surged on easing concerns about the global credit crisis that has battered Asian stocks since the start of the year.

"I think this is the beginning of a rally," said Francis Lun, a general manager at Fulbright Securities in Hong Kong. "We have gone down low enough and the market is ready for a rebound. Banks will lead the rally."

Hong Kong's benchmark Hang Seng index jumped 6.4 percent to 22,464.52, while Australia's S&P/ASX 200 index rose 3.7 percent to finish at 5,318.4.

Japan's Nikkei 225 index climbed 2.2 percent to 12,745.2 after closing flat on Monday and India's Sensex was up 5.5 percent in afternoon trading.

Investors were heartened by a new agreement that will give Bear Stearns Cos shareholders five times the payout that was set in a JPMorgan Chase & Co buyout deal a week ago. JPMorgan raised its offer for Bear Stearns to US$10 a share from US$2 a share. The new offer signals that investors' losses might not be as sizable as feared.

There was also optimism about the US housing sector, which has been at the heart of the credit problems. The National Association of Realtors on Monday said that sales of existing homes in the US rose 2.9 percent last month, the first gain since July.

The Dow Jones industrial average rose 187.32, or 1.52 percent, to 12,548.64 on Monday, after rising more than 260 points on Thursday, the last day of trading before the Easter weekend.

In Tokyo, electronics and trading companies were buoyed by the recent recovery in the US dollar, which was trading at ¥100.20. Last week, it dropped below ¥96 for the first time since August 1995. Gainers in Tokyo included Canon Inc, which rose 3.9 percent, and Itochu Corp, up 4.8 percent.

In Australia, banks led the market higher. National Australia Bank, the nation's largest lender, rose 5.1 percent, while Australia and New Zealand Banking Group added 5.9 percent.

Still, some analysts warned that the declines in regional markets may not be over.

"It's too early to conclude an end of the prevailing bear market," said Ernie Hon, a strategist at ICEA Securities in Hong Kong.

The Chinese market recovered from an early drop to close nearly flat, as a rally in airlines offset a continued decline in PetroChina on views the stock is overvalued. The Shanghai Composite Index rose 0.1 percent to 3,629.62.

Taiwan bucked the regional trend. Its main index slid 0.8 percent after surging 4 percent on Monday amid expectations that president-elect Ma Ying-jeou (馬英九) will bring greater economic engagement with China.

The Fed's move to help Bear Stearns and the housing figures appeared to alleviate some of Wall Street's concerns about souring mortgage debt and lenders' resulting hesitance to grant loans of any sort. The latest Bear Stearns deal signals that investors' losses might not be as sizable as feared.

"The reason we've rallied the last three or four days is people are saying `Hey, even if this paper is worth less than people think, the Fed is willing come in and buy it at some level,'" said Charlie Smith, chief investment officer at Fort Pitt Capital Group in Pittsburgh.

The Dow rose 187.32, or 1.52 percent, to 12,548.64, after rising more than 260 points on Thursday, the last day of trading before the Easter weekend.

Broader stock indicators also advanced. The Standard & Poor's 500 index rose 20.37, or 1.53 percent, to 1,349.88, and the NASDAQ composite index rose 68.64, or 3.04 percent, to 2,326.75.

Monday's gains followed a volatile but ultimately strong week for the markets. The Dow and the S&P each showed gains of more than 3 percent for the week, while the NASDAQ advanced more than 2 percent.

Bond prices fell sharply as investors felt less of a need for the safety of government bonds and also rushed to join the stock market rally. The yield on the benchmark 10-year Treasury note, which moves opposite its price, shot up to 3.53 percent from 3.34 percent late on Thursday, a huge advance reflecting s shift in market sentiment.

Denis Amato, chief investment officer at Ancora Advisors in Cleveland, is skeptical that Wall Street might have put its troubles behind it with the Bear Stearns deal. He said the Fed's extraordinary steps a week ago to lend aid to the struggling investment banks and accept as collateral much of the now-shunned debt was helping the market, but that investors will likely face further concerns.

"I just can't remember in my career having an instance where you know within a week what the watershed event was. Now we all know and that makes me a little bit nervous," he said of those conjecturing that the Bear Stearns deal marks the stock market's bottom.

"I'm not sure that the fundamental economics are still turned enough and that we went down enough in a lot of cases to have this be the real bottom. It may be one of many bottoms," Amato said.
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