Asian Stocks Hit 2-Month Highs on US Debt Plan
Asian markets touched two-month highs on Tuesday, with financial stocks among the leaders, as the U.S. government's plan to absorb toxic debts met with investor approval.
The Treasury Department said it would offer incentives for private investors help rid banks of up to $1 trillion of bad debts, raising hopes of a revival in bank lending. Wall Street gained at least 6.8 percent on the news, with bank such as Citigroup and Bank of America gaining at least 20 percent.
Adding to the buoyant mood, data showed an unexpected rise in U.S. existing home sales in February. China also helped boost confidence by promising to keep buying U.S. government debt.
The U.S. dollar and yen both fell, as the safe-haven appeal of both currencies was diminished with the U.S. bank plan. Crude oil rose to a three-month high above $53 a barrel, while commodity prices generally firmed on Wall Street's rally.
Japan's Nikkei 225 Average jumped to a two-month high to close up 3.3 percent with bank shares rising, after details of a U.S. plan to rid the banking sector of bad assets sparked hopes for the stabilization of the financial system. Mitsubishi UFJ Financial leapt 4.5 percent while Sumitomo Mitsui Financial jumped more than 3 percent. Exporters such as Honda Motor also gained as the yen fell across the board, hitting a five-month low against the euro and a 4-½ month trough versus the Australian dollar. But Japan Tobacco, Japan's largest cigarette maker, fell on reports of a possible smoking ban in public places.
South Korea's KOSPI closed1.9 percent higher buoyed by news the government had finalized plans to boost spending by 17.7 trillion won ($12.7 billion)this year. The key banking plays remained firm with Shinhan Financial rising more than 3 percent at the end.
Hong Kong stocks extended their gains in the afternoon session. The Hang Seng Index ended 3.4 percent higher. HSBC surged 9.8 percent, as speculators piled into its nil-paid rights that began trading in Hong Kong on Monday. Top Chinese lender ICBC ended 0.6 percent higher after reports Goldman Sachs may consider selling part of its stake in the Chinese lender.
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The Shanghai Composite Index rose 0.6 percent in heavy trade, rising for a seventh day as property and financial shares remained firm, but the index pulled back from a five-week intraday high as profit-taking pressure mounted.
Australian shares gave up some of its morning gains to close 0.8 percent, with banks leading the gains on optimism over a U.S. plan to rid bank of toxic assets that had fed a strong rally on Wall Street. Miners BHP Billiton and Rio Tinto were both sharply higher. The optimism also lifted the Australian dollar to a 4-½ month peak against the yen. Virgin Blue soared 18 percent, extending Monday's 10 percent gain, after the carrier signed a deal with Delta Air Lines. But gold miners such as Lihir Gold and Newcrest Mining slipped as gold prices fell on the rally in stocks.
Singapore's Straits Times Index tracked the region higher to climb 2.5 percent led by 5-6 percent gains in key banking stocks such as DBS Group.