Asian markets' climb gained traction amid a choppy session on Monday, led by Hong Kong's 4 percent rally. But recession jitters continued to keep investors cautious.
Wall Street chalked its best weekly gain in more than five years to end a three-week losing streak. But weak U.S. economic data had investors bracing for more bleak news pointing to a slowing economy, especially from the corporate front as the earnings season kicked in.
All eyes were on South Korea after the government unveiled a $130 billion bank rescue plan. Seoul stocks closed 2.3 percent higher after swinging in and out of negative territory to hit a new three-year low at one point after early euphoria over the rescue package faded. Analysts said the steps lagged measures by other governments around the world and would not be strong enough to reverse the stock market trend. Hyundai Heavy Industries, the world's top shipbuilder, slid 7.3 percent on concerns a global downturn would hurt demand for new ships and vessel prices. Industrial Bank of Korea shares dived amid fears the state-controlled bank could be exposed to more sour loans arising from the government plan to pump 1 trillion won into the bank to raise its capacity for corporate lending.
Japan's Nikkei 225 Average extended its gains to close 3.6 percent higher , as a softer yen prompted bargain hunters to pick up battered exporters such as Sony. Panasonic lent support to the market, its shares jumping almost 6 percent, following a report in the Nikkei business daily suggesting the electronics maker, which had predicted a drop in first-half operating profit, is now seen beating its forecast by more than 20 billion yen ($196.9 million).Elpida Memory was untraded due to a glut of sell orders.
Shares of the memory chipmaker have been hit since it warned of a loss in its fiscal first-half on October 14. Japanese steel shares advanced after media reports said Nippon Steel and JFE Holdings were likely to raise their annual profit forecasts on lower costs and price hikes.
Hong Kong's Hang Seng Index rallied nearly 770 points on Monday to surge 5.3 percent, as blue chips turned around from Friday's three-year closing low. Property stocks were boosted by government steps to support the sector. But Ping An insurance lost favor this session, on news the company would post a loss in the first nine months of 2008 after it booked a loss on its investment in the troubled Belgian-Dutch financial group Fortis.
Stocks across the mainland made an about turn towards the end of the session led by financial and property shares as expectations mounted for further monetary easing after data showed a drop in inflation and slowing economic growth. The Shanghai Composite Index rose 2.3 percent at the finish line.
Australia's benchmark S&P/ASX 200 clung on to its gains on Monday to close 4.3 percent higher. The market was buoyed by miners thanks to a gain in metal prices. One stock to note was New Zealand's Steel & Tube, which slumped almost 22 percent at one point after One Steel scrapped its offer to buy the Steel & Tube shares it does not already own, citing market volatility and the weak New Zealand economy.
The Singapore market rose 3.2 percent higher but Malaysia's KLCI was flat after the government said it would cut its growth outlook in view of the slowdown in the global economy.