Asia - Asian markets higher as global rally continues

Global stocks have continued to rally, with Asian-Pacific markets rising sharply.

Markets in Australia and New Zealand were among the first to open Wednesday and continued Tuesday's rebound. Japanese stocks were also higher.

Australia's benchmark S&P/ASX200 index rose 3 per cent in early trading to 4,214 points, while New Zealand's benchmark NZX50 was up almost 4 per cent by midmorning. In Japan, the Nikkei 225 was up 1.4 per cent to 9,073.37 in early trading.

Speculation that the U.S. Federal Reserve may announce another round of monetary easing helped stock markets rebound Tuesday after many entered official bear market territory.

Wall Street's Dow Jones industrial average finished Tuesday with a 429-point gain after the Fed offered super-low interest rates for two more years.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

LONDON (AP) — Speculation that the U.S. Federal Reserve may announce another round of monetary easing helped stock markets rebound Tuesday after many entered official bear market territory.

A statement from the Fed is expected around 1415 EDT (1815 GMT) and hopes that it will be forced into more action helped most stocks in Europe and Wall Street post solid gains.

Investors still remained worried, however, about the consequences of the U.S. credit downgrade, Europe's debt crisis and mounting expectations of a global recession. That's evident in the continued strength of traditional safe haven assets, like gold and the Swiss franc, which have been hitting regular record highs lately.

"While we are still not convinced the Fed is prepared to announce significant new monetary policy steps, changes in the statement aimed at supporting the financial markets are likely," said Vassili Serebriakov, an analyst at Wells Fargo Bank.

In Europe, the FTSE 100 index of leading British shares closed up 0.3 per cent at 5,085 while France's CAC-40 rose 0.8 per cent to 3,153. Germany's DAX though continued to underperform its peers, trading 0.3 per cent lower at 5,899.

The Fed talk helped Wall Street recover following dizzying losses the previous session — the Dow Jones industrial average was up 1.9 per cent at 11,022 while the broader Standard & Poor's 500 index rose 2.3 per cent to 1,145.

One option for the Fed is to announce that it is considering another monetary stimulus, which would be its third in the last three years. Kenneth Rogoff, a Harvard University economist, says that may be the only hope to help the U.S. avoid a Japan-style lost decade of low growth and benign prices.

Louise Cooper, a markets analyst at BGC Partners, said another stimulus could take equity markets up "substantially" though it "may not pack quite the same punch."

Stocks around the world were supported after August 2010, when the Fed announced a $600 billion monetary easing, which ended in June. Since that easing ended, "chaos has ensued," Cooper said.

The recovery in stocks has come after many markets officially entered bear market territory, whereby they have fallen by over 20 per cent since their peak as investors looked for relatively safer assets to park their cash, such as gold and the Swiss franc.

The other major worry in the markets remains Europe's debt crisis and here again there are signs that the recent stresses may be easing, albeit as a result of an intervention by the European Central Bank.

The European Central Bank stepped in Monday and bought billions of euros worth of their bonds. The move helped to lower yields on Spanish and Italian ten-year bonds around a percentage this week to a little over 5 per cent — a rate considered manageable for now. The euro was also fairly buoyant, rising 0.3 per cent to $1.4221.

In the oil markets, recovering stocks helped oil prices recover. The main benchmark rate was up 30 cents at $81.61 a barrel. Earlier it had fallen to $75.71, its lowest since September 2010.

Stock markets in the traditionally oil-dependent Middle East were also volatile with the benchmark index in OPEC powerhouse Saudi Arabia, the region's largest economy, closing 0.8 per cent at 6,009 points. Earlier it had been more than 4 per cent lower. Egypt led the region's declines, with the EGX30 index plunging 4.7 per cent to close at 4,478 points. The exchange temporarily halted trading late in the morning once broader indicators fell by more than 5 per cent.

Earlier in Asia, Hong Kong's Hang Seng led the declines, tumbling 5.7 per cent to 19,330.70. Other markets fell too, including Japan's Nikkei 225 stock average, which ended 1.7 per cent lower at 8,944.48, having earlier traded 4 per cent down. China's main market in Shanghai fared moderately better, closing less than a point lower only at 2,645.70.

AFP

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