Asian Stocks Mixed, Hang Seng Soars 14%

The majority of Asian stock indexes closed in positive territory Tuesday, despite highly a volatile session where stocks struggled to find direction. The Hang Seng ended 14.3 percent higher and the Nikkei 225 finished 6.4 percent higher after spending most of the morning session in the red.

The U.S. dollar climbed to a 2-1/2-year high against the euro , benefiting as institutions and investors unravel overseas trades financed by borrowing in dollars. The result has been a scramble for the U.S. currency and a broad decline in almost every asset class outside of government bonds in the euro zone, Japan and the United States. The yen strengthened against the euro, a day after the Group of Seven rich nations issued an unusual brief statement singling out the yen, warning that high volatility in the currency could be detrimental to stability. Oil futures fell nearly $1 a barrel to an 8-month low as demand for fuel weakened on recession worries.

Japan said it will impose a ban on naked short selling today, to deal with the turmoil in the stock market. The ban was originally scheduled to go into effect on the first working day of November. The Ministry of Finance, the Financial Services Agency and the Tokyo Stock Exchange will also launch an investigation into naked short selling to determine if there have been any illegal practices and to impose penalties retroactively if such conduct is found.

The Nikkei 225 Average climbed 6.4 percent, with investors picking up beaten-down shares such as Honda Motor, encouraged by a softer yen and after the benchmark briefly broke below 7,000 for the first time in 26 years. But shares of major banks continued to weigh on the market on dilution concerns after top lender Mitsubishi UFJ Financial Groupsaid it would raise up to $10.6 billion to replenish a capital base depleted by a plunging stock market and its investment in Morgan Stanley. MUFG lost 5.5 percent. Sumitomo Mitsui Financial Group shed 12 percent.

Seoul shares closed 5.57 percent up cutting earlier near 5 percent-losses as pension funds piled back into the market to snap up blue chips at bargain levels, sending Hyundai Motor and Hynix higher. The Kospi is now down 47 percent on the year.

Australian stocks slipped 0.4 percent, the fifth straight session of losses, but a late rally helped the benchmark index finish off lows in line with a revival across Asian stock markets as bargain hunters moved in. Banking stocks finished mixed, with National Australia Bank down 4.3 percent but Westpac adding 2.5 percent. Queensland Gas soared 80 percent to A$5.75, after agreeing to a takeover offer at that price, worth A$5.6 billion ($3.4 billion),from Britain's BG Group

Hong Kong shares gained 14.3 percent, bouncing off a five-day, 28 percent rout, led by HSBC, but Chinese property stocks slid on gloomy earnings from the country's biggest listed developer. The main index is still about 63 percent off its all-time high hit last October and down 58 percent so far this year. HSBC, soared 20 percent after it shed 25 percent of its market value in the previous two sessions on growing signs of trouble in emerging markets. But shares in property developer China Overseas Land Investment slid 8 percent after Shenzhen-listed China Vanke posted a 13 percent drop in third-quarter earnings and said it would not be able to meet its previously set profit target.

Singapore's Straits Times Index has pared back earlier losses to close 4.1 percent higher -- it was down as much as 7 percent at one point.

China's Shanghai Composite Index bounced sharply to close 2.8 percent higher, led by financial shares after tumbling more than 3 percent, as hopes rose for government steps to support the market and investors drew confidence from a surge in Hong Kong shares.