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Asian Markets Gain as Bears Are Squeezed

CNBC.com
Monday, 16 Mar 2009 | 8:13 PM ET

Asian markets advanced Tuesday, with banks extending gains on hopes the struggling global financial system is stabilizing, despite reports showing the U.S. economy is deteriorating further.

The U.S. dollar edged higher against the euro and the yen while U.S. Treasurys were steady, awaiting word on whether the Federal Reserve would buy government debt to stimulate the economy. U.S. crude for April delivery was trading at $47 a barrel . Since the beginning of the year, oil has bounced around a range of $50 to just below $40.

Barclays said on Monday it has had a strong start to the year, echoing upbeat comments in recent weeks from Citigroup, JPMorgan and Bank of America which have sent battered banking shares higher. The rebound has squeezed some investors who bet against equities, forcing them to buy back shares, but analysts are divided over whether the rally can be sustained without a broad recovery in investor confidence.

Wall Street snapped a four-day winning streak overnight after American Express said its credit card default rates soared last month, hammering home the heavy toll the financial crisis has had on U.S. consumers. U.S. industrial output fell to its lowest level in almost seven years in February, while manufacturing in New York State slumped further this month, data on Monday showed.

Japan's Nikkei 225 Average climbed 3.2 percent as banks extended gains on improved sentiment about the global financial system and mounting hopes for fresh
policy steps as the U.S. and Japanese central banks head into policy meetings.

South Korea's KOSPI finished 3.4 percent higher, posting the highest close in a month, as a continued rebound in the won currency boosted financials, while builders rallied on real estate tax regulation changes.

Australian stocks rose 3.1 percent to a one-month closing high as banks and mining companies climbed on hopes for an economic recovery taking hold, while agriculture stocks were boosted by strong rains. A three-day rise in the stock market provided some confidence to investors and some expect the uptrend to continue. Bank stocks led the market higher on growing optimism that that the recent measures by global central banks would eventually open up credit markets. Macquarie Group, Australia's top investment bank, added 9 percent and National Australia Bank, the top lender, gained 3.2 percent.

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Hong Kong shares lost 0.8 percent, but HSBC rose 2.9 percent ahead of a shareholder vote on its rights issue, but some China stocks beat a retreat after Monday's strong rally. Shares in Tianjin Port Development Holdings slid after it said it was paying $1.4 billion for control of Shanghai-listed rival Tianjin Port. The stock had risen 38 percent in two weeks in anticipation of an announcement of the deal.

Singapore's Straits Times Index fell 1.7 percent by the market close, with bank stocks such as UOB and DBS Group in negative territory.

China's Shanghai Composite Index rose 3 percent after global copper prices surged and oil rebounded. Jiangxi Copper jumped and Western Mining also gained. Leading coal producer Shenhua Energy climbed and real estate developers were also strong.