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Asian Markets Advance as Credit Fears Ease

Asian stocks rallied in the afternoon session Thursday as growing hopes that the worst of the recent credit market storm may be over, fueled appetite for riskier assets. Major markets around the region were all over 2% higher, taking their cue from a rise in Wall Street Wednesday and signs that U.S. takeover activity could soon recover.

Tokyo's Nikkei 225 Average was up 2.5% as Toyota Motor and other blue-chip exporters surged on the yen's fall. Bridgestone was higher as Japan's largest tire maker said it would invest about 21.5 billion yen (US$188 million) to boost output at plants in India and Indonesia to meet growing demand. The Nikkei has now risen 6.7% this week, recouping nearly 70% of the losses it booked last week. The Nikkei plunged 9% last week, posting its biggest weekly percentage drop in seven years.

South Korea's KOSPI rose as much as 3% on growing confidence the global economy will weather the recent woes in credit markets, sending blue chips such as Samsung Electronics and Hyundai Heavy Industries sharply higher. Financial shares including Shinhan Financial Group also gained after Fitch Ratings reiterated on Wednesday that South Korea has, for the most part, limited exposure to securities tied to the U.S. subprime mortgage sector. The KOSPI has now gained 11% in the past four sessions, recovering all of its 10.4% slump last week when investors were gripped by worries that a U.S. subprime mortgage crisis would limit available credit and leave funds exposed to losses.

Australia's S&P/ASX 200 Index jumped 2.5% as strong earnings boosted shares in top miner BHP Billiton and fund manager AMP, and receding worries about credit markets lifted financial shares. Analysts said upbeat domestic company earnings, coupled with renewed takeover activity in the U.S., have helped regain investor confidence in financial markets following weeks of turmoil.

Singapore's benchmark Straits Times Index rose 2%, tracking gains on Wall Street and in line with rallies in other Asian markets. Leading the advance -- financials. Shares of DBS Group, United Overseas Bank and Oversea-Chinese Banking Corp were all sharply higher.

Hong Kong's Hang Seng Index was up 2%, pacing gains in Asia, as China Mobile surged at the open on short-covering and expectations that mainland investors would pile into the stock after China loosened capital controls this week.

China's Shanghai Composite Index climbed for the first time above the key 5,000 barrier, a milestone in a spectacular bull run that has more than quadrupled the index since the start of last year. The bull run has been triggered by government policies that removed a $200 billion overhang of untraded state-held shares and encouraged the country's biggest companies to list, luring millions of new investors into the market.