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Asian markets show signs of life after global rout

(Agencies)
Updated: 2008-10-07 14:17

SEOUL, South Korea - Asian stocks showed signs of life Tuesday after a global market sell-off, with several markets climbing into positive territory or paring losses after opening sharply lower.

Australian stocks jumped after the country's central bank cut interest rates by a bigger-than-expected 1 percentage point to 6 percent in response to the unfolding global financial crisis. The S&P/ASX-200 index rose 2 percent to 4,634 after opening down 3.7 percent.

Pedestrians look at a stock indicator in Tokyo Tuesday, October 7, 2008. Japanese shares fell sharply in early trade Tuesday, briefly sending the country's benchmark index to its lowest level since December 2003. [Agencies]

Japan's benchmark Nikkei 225 index erased some losses after briefly falling over 5 percent to below 10,000 for the first time in almost five years. By midday, it was trading about 1.7 percent lower at 10,292.

Markets in South Korea, India, Singapore all edged higher. Trading in Hong Kong was closed for a holiday.

The Bank of Japan announced it was keeping its interest rates unchanged at 0.5 percent, as expected. However, there is growing speculation that the central bank may soon coordinate with the US Federal Reserve and the European Central bank in an emergency policy move.

Investors in Japan said they were encouraged by a late day rally on Wall Street Monday as well as overall sentiment that stocks had fallen too far too fast, said Toshikazu Horiuchi, equity strategist at Cosmo Securities.

"There was a sense that the market was oversold," he said.

The Dow Jones industrial average, down more than 800 points at one point Monday, recovered in the final 90 minutes of the session to finish down 370 points, or 3.6 percent, to 9,955.50, its first close below 10,000 since 2004.

Still, traders were jittery amid signs that the credit crisis was spreading to Europe, where troubled banks have needed bailouts.

"It's very hard to anticipate how long the repair job is going to take across financial markets at the moment," said Jamie Spiteri, senior dealer at Shaw Stockbroking in Sydney.

In Europe on Monday, leading bourses were battered. London's FTSE 100 index slid 7.9 percent and France's CAC-40 sank a stunning 9 percent, its worst performance ever.

In Japan, carmakers were among the biggest losers, partly due to the dollar's drop to 101 yen levels. Nissan Motor Co. fell 3.9 percent, and Toyota Motor Corp. slid 3.8 percent.

In South Korea, investors steadily bought back shares after the sharp early drop, with the Kospi gaining 0.5 percent in early afternoon trading.

Shim Jae-youb, a strategist at Meritz Securities in Seoul, also said that the Dow's late rally Monday was providing some comfort to investors.

Expectations that leading central banks might lower interest rates would be welcome, he said.

Such a move would provide "positive momentum to the stock market," Shim said.