Asian stocks rallied 3 percent to a one-month high Wednesday amid hopes governments worldwide will bail out ailing industries and increase spending as they fight back against a deepening economic crisis.
The gains in stocks helped pushed down the yen against the dollar and the euro . The Japanese currency has strengthened this year as investors, shunning most types of risk, unwound trades that had used the low-yielding yen. Oil rebounded more than $1 a barrel to above $43, after slumping nearly 4 percent on Tuesday, though expectations that slow global demand for commodities will pressure prices remains.
U.S. stock futures meanwhile edged higher after officials said the White House and congressional Democrats reached an agreement in principalon a proposal for bailing out U.S. automakers.
Japan's Nikkei 225 Average rose 3.2 percent to a one-month closing high after a tentative deal was reached on a plan to rescue the battered U.S. auto industry, with Japanese automakers surging in relief. Investors reassured by the news bought broadly. Even Sony gained after saying the day before it would cut 16,000 jobs, curb investment and pull out of some businesses to save $1.1 billiona year as the financial crisis ravages demand for its electronics products.
Seoul shares ended up 3.62 percent as automakers turned higher after news that a U.S. auto industry bailout deal was near, while banking issues advanced on growing strength in the won currency.
Australian shares closed 1 percent higher, reversing an early fall, driven up by the miners and on relief after Commonwealth Bank of Australia announced a smaller-than-expected share sale. CBA managed to sell $493 million in new sharesdirectly to Merrill Lynch.
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Hong Kong shares jumped 5.6 percent, helped by Chinese financial and resources stocks on hopes of support measures from Beijing, while Air China soared over 22 percent at one point on expectations it would cancel or postpone aircraft deliveries. Beijing is expected to announce a slew of measures to boost private consumption and prop up the stock markets.
Singapore's Straits Times Index gained 3.8 percent with Sembcorp Marine up 14.3 percent after the oil rig builder clinched a S$200 million ($132.8 million) contract from offshore firm Modec. Singapore's economy is expected to grow 0.4 percent in the fourth quarter from a year earlier, after shrinking 0.6 percent in the third quarter, a central bank survey showed.
China's Shanghai Composite Index swung back into positive territory to close 2 percent higher, after shockingly weak producer price data suggested the risk of deflation was growing. Annual producer price inflation tumbled to 2.0 percent in November from 6.6 percent in October, declining for the third month in a row and coming in well below economists' median forecast of 4.4 percent. Although the data may increase room for more easing of monetary policy, interest rate cuts had already been expected by the market, and the data served mainly to raise concern about the weakness of the economy.