Asian stocks rose to a two-month high Monday and high-yielding currencies advanced on the yen after details on a U.S. plan to rid banks of up to $1 trillion of toxic assets improved confidence about risk taking.
The White House said it would put in as much as $100 billion into a bailout fund and give attractive financing to private investors to buy highly illiquid assets from banks, sending dealers diving back into equities and selling safe havens such as gold and U.S. Treasurys.
Details of the planwhich slowly emerged through newspaper reports over the weekend extended a global stock market rally that has lasted nearly two weeks on hopes the financial system was stabilizing after some of the largest U.S. banks said they had solid results in the first two months of the year.
Hopes for the U.S. plan boosted U.S. stock futures by more than 1 percent. Already BlackRock, the largest U.S. publicly traded asset manager, said it would take part in the plan, relieving some uncertainty as to how much private participation there would be.
Currencies that were sold off heavily during the most violent periods of market volatility performed well. The Australian dollar inched up near a two-month high, and sterling also strengthened. The euro hit a five-month high against the yen , following remarks by European Central Bank President Jean-Claude Trichet underscoring that rates were already at low levels and may turn to unconventional measures to shore up the banking system. U.S. crude futures rose over 1 percent towards $53 a barrel.
Japan's Nikkei 225 Average closed 3.4 percent to post its highest close in seven weeks, with banks including Mitsubishi UFJ Financial Group jumping 4.7 percent on optimism about U.S. plans to further help a strained financial system.
South Korea's KOSPI finished 2.4 percent higher, led by financials on U.S. bank plan expectations, while gains by technology issues including LG Electronics and Hynix Semiconductor lent further support.
Australian shares closed 2.4 percent higher, lifted by banks and miners, on hopes the Obama
administration's plan to cleanse banks of up to $1 trillion in bad assets would get credit flowing and revive the U.S. economy. Gains were powered by the top banks, which surged after details of the U.S. toxic assets plan came out. Westpac Banking, Australia's second-largest bank, led the pack, rising 4.3 percent, its highest in more than four months. Commonwealth Bank of Australia matched the milestone, rising 3.2 percent.
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Hong Kong shares rose 4.8 percent to a five-week high, but HSBC made only modest gains as its rights began trading. HSBC rose 0.6 percent as its deeply discounted rights shares began trading, adding to the volatility in the underlying shares. But the other index heavyweight China Mobile rose 4.9 percent, rebounding from the two-day, 7.3 percent slide that followed its earnings announcement on Thursday.
Singapore's Straits Times Index extended gains, up 4.2 percent. Most blue chips were in positive territory with cyclical plays SembMarine surging 9.7 percent and Noble Group up 7.3 percent.
China's main stock index jumped 2 percent to a one-month high in heavy trade, led by property, non-ferrous metals and financial shares on signs that China may pursue additional stimulus spending. The official China Securities Journal quoted Finance Ministry researcher Jia Kang as saying that China was preparing a new round of stimulus spending in case second-quarter data indicated such spending would be required.