Asian Stocks Rally, Investors Await Verdict on US Stimulus

Asian markets rose for a fourth day Friday, with investors awaiting a vote on a massive U.S. stimulus package, while the greenback was steady ahead of U.S. employment data likely to reflect a deep recession.

Most other currencies and U.S. Treasuries remained in narrow trading ranges, with the market's attention focussed on the fate of stimulus measures and a "bad bank" scheme to separate the toxic assets plaguing financial institutions, which is expected to be announced next week.

The dollar slipped against the yen in cautious trade before key jobs data that is expected to paint an even bleaker picture of the U.S. labor market. The Australian dollar fought back from initial losses after after the country's central bank slashed its growth forecasts, paving the way for more interest rate cuts. Oil prices dropped below $41 a barrel, after climbing about 70 cents overnight on hopes for U.S. stimulus measures to take shape sooner rather than later. As it has for the last three weeks, the $40 level has been a floor for prices.

Japan's Nikkei 225 Average closed 1.6 percent higher as a weaker yen lifted exporters such as Canon and after a rally on Wall Street the previous day.

South Korea's KOSPI added 2.7 percent, with steelmakers rising on expectations the U.S. administration would soften its stance on steel imports, while techs advanced on hopes of an industry turnaround.

Australian shares finished up 1.2 percent, led higher by miners after a rise in gold prices while banks were mixed in volatile trade following profit statements by two of the top four lenders.   The Reserve Bank of Australia (RBA) seemingly left the door open for more cuts in interest rates after a 100 basis point drop this week, predicting Australia's economy would barely grow at all in 2009, while core inflation would return to its target a year earlier than expected.

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Hong Kong shares rose 3.6 percent, heading for a third straight day of gains and joining a rally across the region as hopes built for the U.S. government's stimulus plan. Lenovo Group jumped 10 percent a day after the computer maker posted its first loss in three years. But PCCW, which resumed trade today, was down as uncertainty loomed over its privatization bid, despite the minority shareholder approval on Wednesday, as the securities watchdog began its investigation into a vote-buying allegation. 

Singapore's Straits Times Index was 0.6 percent higher. Shares of Raffles Education gained as much as 7.2 percent after it posted a 66 percent rise in second quarter profit.

China's Shanghai Composite Index jumped 4 percent in heavy trading, making a weekly gain of over 8 percent, on the back of hopes for an early economic recovery. Investors piled back into the market, worried that they might miss an uptrend. Cyclical stocks which could benefit most from economic recovery outperformed, with SAIC Motor, the biggest auto
maker, climbing.

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