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Asian Markets Bounce Back from 5-Year Lows

Asian markets experienced a large turnaround Friday, after hitting five-year lows in the morning session. Stocks bounced into the black on rumors that China would adjust interest rates as well as short covering.

The yen was stronger, with yields on U.S. Treasuries hitting historic lows. Oil sank through the $50 a barrel level for the first time since May 2005, on plummeting investor confidence. Futures are currently trading above $49 a barrel in the Asian session.

Japan's Nikkei 225 Average climbed 2.7 percent, buoyed by short-covering touched off on hopes of a Wall Street rise and defying increasingly grim economic
news, with exporters such as Sony rising. Sumitomo Mitsui Financial Group also climbed on
bargain-hunting after hitting a five-year low the day before, with battered fellow banks gaining as well.

Seoul shares ended 5.80 percent higher, above the psychologically significant 1,000 level, shedding earlier losses of up to 3.6 percent as shipbuilders and carmakers rallied after their latest steep drops. Foreign investors turned net buyers for the first time in 9 sessions.

Australian shares closed 1.9 percent higher, after earlier touching five-year lows, as bargain hunters scooped up mining stocks at the end of a week of devastating losses. Banking stocks made a strong recovery late in the session with Commonwealth Bank of Australia and Wespac Banking both gaining 4 percent.

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Hong Kong stocks rallied strongly, ending the session 2.9 percent higher, as U.S. stock futures pointed to a recovery on Wall Street and amid talk that China may adjust rates again. China Construction Bank, which had fallen 12.7 percent in the previous three sessions on talk that Bank of America may dilute some of its holding in the Chinese lender, jumped 6.1 percent.

Singapore's Straits Times Index reversed losses to close 3 percent higher, led by gains in rig builder Sembcorp Marine and shipping firm Neptune Orient Lines.

Chinese stocks closed 0.7 percent lower. Fund managers noted a rumor that Chinese authorities might soon announce the creation of a 300 billion yuan ($44 billion) fund to support the stock market.