Asian markets ended higher across the board Thursday, as risk appetite returned to the market after comments from the vice chairman of the Federal Reserve bolstered expectations for a U.S. interest rate cut.
Investors cheered after the U.S. central bank's second in command, Donald Kohn, signaled a willingness to lower borrowing costs further, saying financial market turmoil could slow the U.S. economy and the Fed had to be flexible.
The dollar steadied near a one-week high against the yen as Wall Street's rally restored investor confidence and prompted traders to drop the low-yielding Japanese currency.
Banks stocks, recently pounded by worries about credit losses, led the region's rebound with Australia's Macquarie Group and Japan's Mitsubishi UFJ both rising. Citigroup jumped over 7 percent in Tokyo, but National Australia Bank lagged, advancing just 0.7 percent as investors digested news that it planned to buy privately owned Great Western Bank for $707 million to expand its U.S. agribusiness banking.