Asia Rallies on Citi Rescue, Risks Remain

Asian markets rose Tuesday and so-called safe haven assets such as bonds fell after the U.S. government rescued banking giant Citigroup to prevent further damage to the ailing global financial system.

The yen recovered from sharp day-earlier falls to edge up against major currencies, but traders said the Japanese currency's recent gains from safe-haven bids were likely to pause in the near term as the willingness to take risks returns. Oil prices slipped below $54 a barrel after surging more than 9 percent in the previous session, a rally that was big enough to send regional commodity-related stocks such as BHP Billiton sharply higher.

Japan's Nikkei 225 Average climbed 5.2 percent, its biggest one-day rise in two weeks, though further gains were limited as the yen's advance against the
dollar weighed on exporters such as Sony. Mizuho Financial Group and other banks were boosted by the massive Citigroup bailout and subsequent Wall Street rally.

South Korea's KOSPI ended 1.36 percent higher but the index gave up much of its earlier 6 percent gain as big falls in auto issues weighed on the main index, while gains in some banks and defensive issues helped.

Australian stocks jumped 5.8 percent to a one-week closing high, as top miner BHP Billiton surged on higher copper and oil prices, while banks were boosted by the U.S. government's rescue of Citigroup. Airline stocks suffered however after Qantas Airways cut its profit forecast, while logistics firm Brambles fell after forecasting lower profit from its key U.S. business.

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Hong Kong shares rose 3.4 percent on Wall Street's resounding thumbs up to the government's decision to rescue Citigroup, while resurgent oil prices helped energy stocks to notch up big gains. China's top lender, ICBC, surged 9.3 percent after Goldman Sachs added the stock to its conviction buy list, citing its lower risk profile and less net interest margin pressure than its peers.

Singapore's Straits Times Index rose 2 percent. Shares of commodity firm Noble Group gained as much as 9.4 percent at one point on rebounding commodity prices, but closed 0.7 percent higher.

Chinese stocks were mixed in shrinking turnover as profit-taking and concern about fresh supplies of equity caused them to underperform rallying foreign markets. Unlike foreign markets, Chinese stocks gained sharply early this month on news of China's big economic stimulus package, so they now have less room to rebound during any global market recovery, analysts said.