Chinese Stimulus Plans Gives Asia a Boost

Asian stocks and commodity prices climbed Monday after China unveiled a nearly $600 billion economic stimulus plan, one of many measures countries are undertaking to limit the economic fallout from the financial crisis.

The yen fell as investors embraced the high-yielding Australian dollar after China's announcement and as financial officials from the Group of 20 economic powers, which include major developing countries, ironed out ways to stimulate growth at a weekend meeting. The Australian dollar -- a bellwether of carry trades where the low-yielding yen is used a cheap source of funds to buy higher-yielding currencies -- was up over 2 percent against the greenback.  U.S. crude oil prices rose to trade above $63, rebounding after sliding on Friday to a 1-1/2-year low below $60.

Japan's Nikkei 225 Average gained 5.8 percent as China's nearly $600 billion economic plan helped boost investor confidence, encouraging buying of shippers and machinery firms such as Hitachi Construction Machinery.

Seoul shares ended higher helped by moves by China and the G20 nations to fight a global economic slowdown and financial crisis, which lifted industrial issues, but Hyundai Motor dropped on trade worries.

Australian shares closed up 1.4 percent, with materials stocks leading the way.  BHP Billiton rose 7 percent and Rio Tinto rose 7.9 percent. However, banks came under pressure after a capital raising by National Australia Bank, and the market pared half of its gains from its intraday high by close of trading. 

Hong Kong shares rose 3.5 percent as resources and building material stocks cheered China's $586 billion stimulus package, but shares pared early gains as euphoria over the measures gave way to pessimism that they will not avert a looming global recession. Shares of Lenovo, the world's No. 4 PC maker, slid nearly 11 percent after Morgan Stanley cut it to underweight from equal weight, saying the global financial crisis posed greater challenges for the company given its gearing, margin dilution and higher fixed cost burden. HSBC eased from early gains to close 0.3 percent higher, after the Standard newspaper said the global lender may cut 600 more staff in Asia as economic conditions worsen.

More From CNBC.com ...

• Credit Spreads and Libor Data
• Futures and Pre-Market Data
• Currency Data

Singapore's Straits Times Index ended 1.2 percent higher. Singapore Airlines weighed on the market, closing 1.5 percent lower after Merrill Lynch cut the firm's target price on a softening global airline sector. Separately Goldman Sachs said in report the slowdown in demand calls for capacity reduction and it is increasingly probable that SIA will face progressive losses as demand for long-haul premium services softens.

China's Shanghai Composite Index leapt 7.3 percent after the government announced a major stimulus package for the economy. Companies which could benefit directly from the package's fiscal spending on infrastructure projects were particularly strong, with Baoshan Iron & Steel, the biggest listed steel maker, gaining sharply. Analysts said the package would not quickly end a slowdown in China's economy, given grim global conditions, but it would reduce the risk of the worst-case scenarios that many investors had been fearing.

Copyright 2011 Thomson Reuters. Click for restrictions.