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Asian stocks extend gains on proposed US bailout

Asian stocks extend gains on proposed US bailout
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First Published: Mon, Sep 22 2008. 10 33 AM IST
Updated: Mon, Sep 22 2008. 10 33 AM IST
By Jeremiah Marquez / AP
Hong Kong: Asian markets extended gains Monday after the US government proposed a $700 billion plan to solve the world financial crisis by rescuing banks from billions of dollars in risky mortgage debt.
In Japan, the Nikkei 225 index was 1.7% higher at 12,123.54 points by midday, while Hong Kong’s Hang Seng index added 1.1%.
Australia’s S&P/ASX 200 jumped 4%, buoyed by new rules banning all short selling following similar actions by regulators in the US and Britain.
Asian markets had rallied Friday on news Washington was likely to announce a bailout plan, calming investors worried that losses from bad bets on mortgages could bring about the collapse of more companies, straining an already weakened financial system and global economy.
On Sunday the Bush administration continued to lobby lawmakers for authority to use $700 billion to buy up a mountain of bad debt at the heart of the crisis.
“While the proposed bailout lifted sentiment for the time being, there were still a number of uncertainties about the plan and the general health of financial firms that could further unsettle markets in the coming days,” an analyst said.
“This should stem the bleeding, but the patient is still very fragile. The list of uncertainties is pretty long,” said Thomas Lam, a senior economist at the United Overseas Bank in Singapore.
Financial shares
In mainland China, the stocks gained on strong buying of financial shares after the government announced several moves to support the market, including plans to buy shares in major state-owned banks.
The Shanghai Index has gained 132.39 points to 2,207.48 by midday Monday. It had surged 9.5% on Friday, its biggest one-day percentage gain ever. Several major banks have jumped by the 10% daily limit, including ICBC, Bank of China and Construction Bank of China.
The advances came after an another extraordinary rally on Wall Street on Friday. The Dow Jones industrials soared about 370 points, or 3.35%, to 11,388.44, giving them a gain of about 780 over two days.
In Japan, banking giant Mitsubishi UFJ Financial Group Inc. climbed more than 5%, while leading Australian firm Macquarie Group Ltd. surged 8.5%.
Industrial & Commercial Bank of China Ltd, or ICBC, the country’s biggest lender, was 2.5% higher in Hong Kong trading.
Light, sweet crude was exchanging hands at $104.40 a barrel in Asian trading on the New York Mercantile Exchange, down about 15 cents. The contract soared $6.67 on Friday .
In currencies, the dollar fell to ¥106.51, while the euro rose to $1.4519.
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First Published: Mon, Sep 22 2008. 10 33 AM IST
More Topics: Markets | Stocks | Asia | US | Bailout |