Most Asian markets managed to bounce back and close higher Friday, except for India's Sensex index which closed down by more than 3 percent.
Markets were now only mildly weaker, though concerns of a U.S. recession persist. Japan and South Korea both finished higher, this after the Tokyo stocks had opened over 3 percent lower.
The U.S. dollar struggled near a 2-½ year low against the yen after U.S. Federal Reserve Chairman Ben Bernanke told lawmakers that more interest rate cuts may be needed to counter a worsening economic outlook, but has recovered to trade higher against the Japanese currency once investors were reassured after the Nikkei's rally.
U.S. President George W. Bush told lawmakers on Thursday he wants tax rebates for families and breaks for businesses in a rescue plan for the struggling US economy that could total $150 billion. Bush held private conference calls with leaders of the Democratic-controlled Congress and their Republican counterparts.
Japan's Nikkei 225 Average recovered from an early dive to end 0.6 percent higher, lifted by expectations that Bush will propose measures to boost the flagging U.S. economy. Industrial robot maker Fanuc, one of the biggest drags on the Nikkei in the morning, reversed course and finished almost 2 percent higher.
South Korea's KOSPI reversed early sharp losses to end up
0.7 percent, with underperformers such as Samsung Electronics rising on growing hopes for measures to boost the economy from U.S. President George W. Bush.
Australian shares fell for a 10th straight day, logging their longest losing streak in 26 years as fears of a likely recession in the United States spooked sentiment. But the market recovered from steep early losses amid talk that Bush was proposing a stimulus package to the boost the economy. Rio Tinto rebounded on speculation of an enhanced by rival BHP Billiton. The S&P/ASX 200 Index closed 0.84 percent lower.
In markets still trading, Hong Kong stocks fell over 1 percent, led by global lender HSBC Holdings, as more signs that the U.S. economy is at high risk of contracting led investors to dump shares. The market fell nearly 4 percent at one point, but steadily narrowed its losses as bargain hunters stepped in.
China's Shanghai Composite Index outperformed regional markets, ending off in positive territory, up 0.6 percent on the day, as strong 2007 earnings estimates released by several banks kept many large caps firm. Industrial and Commercial Bank of China, China's biggest bank, rose after estimating its net profit grew over 60 percent last year.
China Everbright Bank and Sinosteel announced plans to list shares in Shanghai and then in Hong Kong this year to raise CNY 20 billion and $1.5 billion respectively, Dow Jones Newswires reported.
Singapore's FTSE Straits Times Index pared back losses to close higher by more than 2 percent.