Asian markets staged a strong rebound on Friday after four straight sessions of massive losses. China and Hong Kong led the rally, both up more than a whopping 9 percent following Wall Street's best performance best day in six years.
Reports that U.S. Treasury Secretary Henry Paulson was considering an entity to deal with the billion in bad debts clogging the financial system, saw U.S. shares leap after earlier trading in negative territory Thursday. The move capped off another volatile day's trading, which was dominated earlier by news central banks around the world had injected $180 billion into ailing banking systems.
The U.S. dollar rose against the yen and wiped off most of its earlier losses against the euro on hopes the Paulson measure would solve the financial crisis. Crude oil rose on problems in restarting refineries in the wake of Hurricane Ike, while the late surge in stocks saw bonds hammered.
China's Shanghai Composite Index surged 9.5 percent in response to a market support package announced by the government lateon Thursday and a rebound in overseas markets. Most shares rose their 10 percent daily limits. The government announced after the markets closed on Thursday that Central Huijin, an arm of the country's sovereign wealth fund, would help stabilise the stock market by buying shares in listed companies, including three top state-owned banks. Authorities also scrapped the 0.1 percent stamp tax on purchases of equities, and urged state-owned enterprises to buy back shares of their listed units from the market.
A rally in Chinese financials listed in Hong Kong gave the Hang Seng Index a lift. The market jumped 9.6 percent, with the Industrial and Commerical Bank of China and other mainland banks chalking up gains of over 10 percent.
Japan's Nikkei 225 Average climbed 3.8 percent at the finish line, boosted by news that the U.S. government is considering a comprehensive solution to the financial crisis. Financial shares such as top lender Mitsubishi UFJ Financial Group surged, while Nomura Holdings, Japan's largest brokerage, climbed 9.6 percent. Exporters including Canon and Honda Motor gained sharply. But Nakayo Telecommunications dived 19.3 percent after the phone maker slashed its outlook to a $6.2 million operating loss for the year.
Seoul shares jumped 4.6 percent at the close, with market heavyweights such as LG Electronics surging 11.5 percent, boosted by hopes of a more comprehensive solution to the financial crisis by the U.S. government. However, Korea Exchange Bank skidded 10.3 percent after news UK-based bank HSBC dropped its offer for a 51 percent stake.
Singapore's Straits Times Index chalked up 5.8 percent in gains, led by property and bank stocks. DBS Group, Southeast Asia's biggest bank, rose 4.6 percent, while Neptune Orient Lines gained 17.9 percent. Shares of Straits Asia Resources jumped as investors cheered news that its parent company Straits Resources will cancel demerger plans due to the current market volatility.