Asian stocks surged, with Japan's Nikkei finishing 14 percent higher Tuesday after governments around the world readied plans to take stakes in banks to keep the global financial system from collapsing.
The yen fell broadly and the yield on the 10-year U.S. Treasury note hit a two-month high as investors ditched low-risk investments to scoop up heavily oversold shares as policymakers staged their biggest and most coordinated effort yet to kickstart lending markets and ease credit strains.
Fears of a looming global recession were not dead, but for now the sweeping emergency steps being enacted by governments reduced the risk of financial system failure.
The euro rallied against the yen, having rebounded off a three-year low of 132.15 yen hit on trading platform EBS on Friday. The U.S. dollar climbed against the yen from late New York, having come off a six-month low of 97.91 yen hit on Friday. U.S. crude oil futures rose more than 4 percent overnight and another 2.5 percent in the Asian session, trading above $83 a barrel.
After plunging 24 percent last week, Japan's Nikkei 225 Average soared more than 14 percent, the biggest one-day gain in its 58-year history, after governments around the world pledged to support struggling banks and restore confidence in the financial system.Canon surged 16 percent and other blue-chip exporters saw similar advances, boosted by the dollar's rise against the yen. Trade in Nikkei futures trading on the Osaka bourse and Topix futures trading on the Tokyo bourse were halted early on Tuesday after a circuit breaker was triggered. shares were put on a trading halt after hitting at their daily limit-high of 810 yen. MUFG completed a $9 billion investment inMorgan Stanley that sent Morgan Stanley soaring in the U.S. session and helped power a rally in financial shares in New York. Shares of MUFG rose 100 yen, or 14.1 percent, after going untraded for nearly 1-½ hours after the market open due to a flood of buy orders. Automakers also surged with Toyota, Nissan and Honda all making double digit gains.
Seoul shares ended up 6.1 percent, posting their biggest one day-gain since Febuary, 2002, led by banks and tech issues such as KB Group and Hynix Semiconductor which gained 12.5 percent. This brings gains on the week to 10 percent for the KOSPI, clawing back most of the 12.6 percent fall last week, its biggest weekly decline since Sept. 2001.
Australian shares finished up 3.7 percent higher, rallying with other regional markets as governments at home and abroad stepped up efforts to stave off a deep global recession, though they ended below earlier peaks. The big four banks followed Wall Street financial stocks higher, led by a 7.3 percent gain in National Australia Bank. Battered investment banks also rallied sharply, Macquarie Group closed up 12.1 percent and Babcock & Brown recovered 39 percent, erasing last week's losses. Banking and insurance group Suncorp Metway was
brought down to earth after saying it had ended talks on a potential sale of its banking and wealth management businesses.
CNBC.com Pre-Markets
Hong Kong shares rose 3.2 percent, building on the previous session's sharp rally. The Hang Seng Index was lifted by a 13.8 percent jump in CNOOC on high oil prices. China Shenhua Energy, the world's most valuable coal miner, soared 12 percent.
Singapore's Straits Times Index soared 3.5 percent. CapitaLand, Southeast Asia's biggest developer, jumped 8.1 percent while Singapore Exchange rose 1.2 percent.
China's Shanghai Composite Index advanced 0.4 percent. It plunged 12.8 percent last week. However, China's market outperformed many foreign markets last week because of a Chinese government scheme to support stocks, including purchases of shares from the market. So some analysts believe China may now underperform a global rally.