Asian markets ended mostly higher Thursday, lifted by banks and financials. Japan and South Korea both closed 2 percent higher with Australia finishing almost 3 percent higher, buoyed by a Wall Street rebound on optimism that a rescue for U.S. bond insurers may be in the making.
The yen pulled back from 30-month high against the U.S. dollar as appetite for higher yielding assets and currencies returned. Growing expectations that another swinging interest rate cut from the Federal Reserve next week -- coming on top of this week's emergency 75 basis-point slash -- to stabilize the U.S. economy also lent support to markets. The mood remained wary, however, as investors still chewed over the prospect of a U.S. recession.
New York's insurance regulator pressed major banks on Wednesday to put up billions of dollars to support ailing bond insurers. The news pushed the Dow and S&P up more than 2 percent by the close of New York trade.
Banks across the region rose on hopes of this bond bailout, as fears over further credit-related writedowns receded. Japan's Mitsubishi UFJ Financial Group, Australia's Macquarie Group, Hong Kong's HSBC Holdings and Singapore's DBS Group were all moving higher.