Asian markets reversed three sessions of losses to rise Friday on hopes that government efforts worldwide, including talk of a U.S. subsidy for mortgage payments, would soften the blow of the global downturn.
News the U.S. government was hammering out a program to subsidize mortgages for homeowners before they fall into loan arrears, first reported by Reuters, helped Wall Street stage a late recovery that extended into gains in Asian markets.
Those efforts came as the US Congress prepares to vote on Friday on the $789 billion economic stimulus bill and Australia passed a A$42 billion ($27.4 billion) economic stimulus package. But optimism was tempered by the tough outlook facing the global economy. Asian stock markets are down about 7 percent for the year as of Thursday, though
still about 18 percent higher than the five-year lows hit in late November.
The U.S. dollar weakened against the yen and the euro Crude oil futures are currently above the $34 a barrel level in the Asian session.
Japan's Nikkei 225 Average finished 1 percent higher, snapping a three-day losing streak on hopes for a new U.S. government program to help troubled homeownersand gains in tech shares such as TDK, with rises in Asian shares providing an additional boost. But Pioneer tumbled, losing a fifth of its value after the Japanese electronics maker said it would cut 10,000 jobs and exit its loss-making flat TV business, a move that could signal a further shake-out in the battered sector.
South Korea's KOSPI closed up 1 percent led by technology and auto issues such as LG Electronics and Hyundai Motor, and also helped by news the U.S. government was working on a program to subsidise mortgages.
Australian stocks rose 1.3 percent to a near one-month closing high, led up by Australia & New Zealand Banking which jumped 9 percent after quashing speculation about a possible capital raising. The market was also supported by infrastructure and retail stocks after the Australian parliament passed a A$42 billion ($27.4 billion) economic stimulus package. One notable exception to the uptrend was global miner Rio Tinto which fell 1.9 percent, with some
investors disappointed by Rio's $19.5 billion deal with China's state-owned Chinalco.
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Hong Kong shares rose 2.5 percent after a two-day decline, with lenders such as HSBC staging a recovery helped by talk of a U.S. subsidy for mortgage payments to help homeowners. Aluminum Corp of China, better known as Chalco, rose 3.3 percent as some analysts bet its parent Chinalco will inject some of the aluminum assets it bought into as part of a $19.5 billion deal with Rio Tinto, into the listed company.
Singapore's Straits Times Index was 1.2 percent higher. Commodity group Olam International jumped almost 10 percent after it reported a 174 percent net profit growth for its fiscal second quarter ended December 2008 on Thursday. Olam, which posted S$103.4 million in net earnings, was lifted by a buyback of convertible bonds at a discount of 65 cents to a dollar, while its agricultural business performed strongly across the board. Olam stock closed 2.2 percent higher.
China's Shanghai Composite Index continued to climb, up 3.2 percent in heavy trading as insurers surged in response to a report that their January premiums were stronger than expected. China Life Insurance, Ping An Insurance and China Pacific Insurance all made strong gains.