Asian stocks rally on hopes for rate cuts

Reuters

Wednesday, October 29, 2008

Asian stocks jumped early on Wednesday, as investors, convinced that central banks worldwide will cut rates even more, scooped up badly beaten-down stocks.

The rally in Asia follows an 11 percent gain in the Dow Jones industrial average overnight, helped by speculation the Federal Reserve will cut rates later on Wednesday and that the Bank of Japan may cut rates soon.

The benchmark Nikkei 225 average gained 7.5 percent to 8,189.72 in early trade, while the broad-based Topix jumped 7 percent, as exporters gained after the yen fell on hopes that the Bank of Japan will cut interest rates at a policy-setting meeting later this week.

The yen was last trading at ¥97.95, after hitting a 13-year low just on Friday at slightly above ¥90.

Seven & I Holdings and Sony Corp. climbed more than 4 percent after the Nikkei English News said the Bank of Japan may cut interest rates to 0.25 percent.

Seoul shares opened 4.8 percent higher, led by technology stocks like Samsung Electronics, which rallied 5.4 percent, and LG Electronics, which gained 7.5 percent.

Australian shares rose 3.8 percent, breaking a five-session losing streak, but a belief that the recovery may be short-lived kept gains in check.

Top banks like National Australia Bank and miners like BHP Billiton led the rise, though analysts said that after the mauling over the past week, investors saw Wednesday's rally as a way to cut their losses.

BHP, the world's biggest mining company, climbed 4 percent, after the London Metal Exchange LMEX Index, a gauge of six metals, climbed for a second day, adding 3.7 percent on Tuesday.

Crude oil rose 4.6 percent to $65.63 a barrel in after-hours trading.