Citi Hopes Support Asia Stocks But China Weighs

Asia markets rose sharply Wednesday after hopes Citigroup will deliver a first-quarter profit sparked an improvement in investor confidence, though grim Chinese export data sent dealers buying the U.S. dollar for safety.

While Beijing's efforts to prop up the economy were expected to really take hold in the third quarter, near-term prospects were in jeopardy as both exports and imports fell for a fourth consecutive month.

Citi, whose share price traded below $1 for the first time last week, was profitable in the first two months of 2009, the bank's chief executive said in a memo to staff, heaping pressure on the firm to post a quarterly profit after chalking up losses in the last five quarters totaling around $37.5 billion.

U.S. stocks closed sharply higher after U.S. Rep. Barney Frank said he is hopeful that the New York Stock Exchange's uptick rule, which slows the pace of short selling and could help calm volatile markets, would be reimposed in about a month.

The rally in stock markets saw the U.S. dollar slide, as investors showed an appetite for riskier positions. Crude oil prices fell nearly 3 percent in the New York session and is trading in Asia below $46 a barrel on forecasts of lower demand, while commodity prices were generally boosted by the rise in stocks.

Japan's Nikkei 225 Average , surged 4.6 percent higher, its biggest percentage rise in six weeks, as financial shares climbed. Toshiba surged more than 9 percent after a newspaper reported it may see an operating profit of about 100 billion yen ($1 billion) in the next business year, while other tech shares climbed in the wake of strong gains by their U.S. peers.

South Korea's KOSPI finished 3.2 percent higher as financials including KB Financial rallied, helped by news that Citigroup saw profits in the first two months of 2009, but KT  underperformed.

Australian stocks rose 1.9 percent to a one-week closing high, led up by financials such as Macquarie Group. The market mood was also supported by news that a key measure of Australian consumer confidence was not as bad as feared. Macquarie, Australia's top investment bank, added 4.5 percent, Westpac Banking, the nation's second-biggest lender, firmed 2.6 percent while funds manager AMP gained 6.2 percent.

More From CNBC.com

• Get After-the-Bell Dow 30 Quotes
• Credit Spreads and Libor Data
• Futures and Pre-Market Data
• Currency Data

In markets still trading, Hong Kong shares rose 2.9 percent as financial firms followed a strong U.S. lead but HSBC Holdings came off early highs as investors readied themselves to meet the bank's $18 billion cash call. HSBC trimmed gains to 6 percent at HK$39.85 after opening 11.7 percent higher. But HSBC was trading well above its rights issue price of HK$28, after
scraping a 14-year low of HK$33 on Monday.

Singapore's benchmark Straits Times Index was up 1.8 percent, led by DBS Group,
following Tuesday's banks-led rally on Wall Street. DBS, the city-state's largest lender by assets, was up 4.6 percent, while United Overseas Bank gained 3.1 percent.

China's Shanghai Composite Index reversed gains to trade flat. The annual session of China's parliament looks set to end this week without major news on fresh policies to stimulate the economy, and the latest data continues to give a mixed outlook for a Chinese economic recovery. China's exports also plunged a much sharper-than-expected 25.7 percent in
February, shrinking the trade surplus to $4.84 billion from $39.1 billion in January. Without better news on the economy or stimulus policies, investors have become reluctant to push many shares higher in the face of high valuations.

Copyright 2009 Reuters. Click for restrictions.