SEOUL - ASIAN markets showed signs of life on Tuesday as investors cheered a big interest rate cut by the Australian central bank aimed at alleviating the unfolding global credit crisis.

A late rally on Wall Street that pared earlier huge losses also gave investors a bit of sorely needed confidence, analysts said.

VIDEO Oz rate cut lifts Asia (1:36)

Citing 'heightened instability' in markets, the Reserve Bank of Australia slashed its key rate by 1 full percentage point to 6 per cent. Analysts had expected a half-point cut.

The move sent Sydney's S&P/ASX-200 index up 1.7 per cent to 4,618.7 after opening down 3.7 per cent.

Other markets seemed to react positively to the bold move: Main indices in South Korea, Singapore and Taiwan all edged higher, perhaps staunching a global market sell-off on Monday.

Japan's benchmark Nikkei 225 index erased some of its early losses to closed down 3 per cent at 10,155.90. Earlier, it had plunged over 5 per cent to below 10,000 for the first time in almost five years.

Unlike its Australian counterpart, the Bank of Japan announced it was keeping its interest rates unchanged at 0.5 per cent, as expected.

However, there is growing speculation that BOJ may soon coordinate with the US Federal Reserve and the European Central bank in an emergency policy move. Some analysts say its unlikely Japan would reduce its key rate because it is already so low.

Earlier on Tuesday, Bank of Japan injected another 1 trillion yen (S$14.5 billion) into the money market in its 15th straight day of emergency operations to foster smoother lending among banks.

Investors in Japan said they were encouraged by a late day rally on Wall Street on Monday as well as overall sentiment that stocks had fallen too far too fast, said Mr 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 per cent, to 9,955.50, its first close below 10,000 since 2004.

US stock index futures were also higher, suggesting that trading in New York might open higher Tuesday morning.

RBA Gov Glenn Stevens said the Australian central bank had judged that a large cut in the cash rate was needed after studying the outlook for global growth and its likely effect on Australia.

'Conditions in international financial markets took a significant turn for the worse in September,' he said in a statement. He also noted evidence of 'a significant moderation in growth in Australia's trading partners in Asia'.

Investors remain 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 Mr 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 per cent and France's CAC-40 sank a stunning 9 percent, its worst performance ever.

In South Korea, investors steadily bought back shares after the sharp early drop, with the Kospi gaining 0.5 per cent in afternoon trading to 1,366.10.

Japanese automakers were among the biggest losers, partly due to the dollar's drop to 101 yen level overnight. Nissan Motor Co. fell 4.9 per cent, and Toyota Motor Corp. slid 4.8 per cent. On Tuesday, the dollar recovered to 102.85 yen.

The euro was trading at US$1.3595 from US$1.3516 late on Monday.

SHANGHAI

Chinese share prices closed down 0.73 per cent on Tuesday as hopes for more market boosting measures from Beijing narrowed early losses sparked by fears over the growing financial crisis, dealers said.

The benchmark Shanghai Composite Index, which covers A and B shares, was down 15.90 points at 2,157.84 on turnover of 47.2 billion yuan (S$10.09 billion).

The Shanghai A-share index fell 16.72 points, or 0.73 per cent, to 2,266.10 points on turnover of 47.0 billion yuan, while the Shenzhen A-share index was down 5.14 points, or 0.83 percent, to 615.61 on turnover of 17.8 billion yuan.

KUALA LUMPUR

Share prices on Bursa Malaysia closed mixed today, with the key index in the positive side following some mild bargain-hunting activities, dealers said.

The benchmark Kuala Lumpur Composite Index (KLCI) closed 0.39 of a point or 0.04 per cent higher at 997.23 led by buying interest in selected bluechips. The CI opened 8.59 points lower at 988.25.

'This morning the local market slipped due to concerns over adverse global economic developments coupled with lower crude oil and palm oil prices,' a dealer said, adding that the mild bargain-hunting managed to counter the easier afternoon session.

He said the market was likely to perform better this week, with the CI resistance seen at 1,021 level and support at 980 level.

The Industrial Index gained 5.55 points to 2,212.58, the Finance Index shed 50.77 points to 8,037.83 and the Plantation Index decreased 41.64 points to 4,508.63.

The FBMEmas rose 0.84 of a point to 6,623.29, the FBM30 increased 4.62 points to 6,454.69, the FBM2BRD declined 58.39 points to 4,837.26 and the FBMMesdaq was 63.71 points lower at 3,856.10.

Losers led gainers by 310 to 249, while 229 counters were unchanged, 547 untraded and 20 suspended.

The day's turnover increased to 457.575 million shares valued at RM942.548 million compared with yesterday's closing of 415.385 million shares worth RM929.629 million.

Among the active stocks, KNM increased one sen to RM1.10, IOI Corp declined six sen to RM3.88, Kinsteel rose half sen to 52 sen, Gamuda was unchanged at RM2.01

Of the heavyweights, Sime Darby and Maybank were flat at RM6.65 and RM6.35 respectively, Tenaga gained 30 sen to RM6.90, TM rose 10 sen to RM3.40 and Genting declined 10 sen to RM5.20.

JAPAN

JAPANESE share prices slid 3.03 per cent to a near five-year low on Tuesday, but managed to end above the key 10,000-points level as a hefty cut in Australian interest rates brought some relief to investors.

The Tokyo Stock Exchange's benchmark Nikkei-225 index dropped 317.19 points to 10,155.90, the lowest closing level since December 2003.

The index had tumbled more than five per cent at one point Tuesday, dropping below 10,000 points for the first time in more than four years.

Investors took some comfort from news Australia's central bank had slashed its key interest rate by a full 100 basis points, a dramatic move aimed at shielding the economy from the ongoing financial turmoil.

The bigger-than-expected rate cut provided a much-needed boost to sentiment around the Asia-Pacific region, lifting some markets back into positive territory.

But investors were still extremely nervous, dealers said.

'The market is still panicky,' Credit Suisse strategist Satoru Ogasawara said. 'Many people are simply dumping shares.' Traders were looking for any signs that authorities may take coordinated action to try to quell the turmoil, and in particular whether they will slash interest rates to shore up market confidence and global economic activity.

HONG KONG

Financial markets in Hong Kong were closed on Tuesday for a public holiday. Trading will resume on Wednesday. -- REUTERS, AFP, BERNAMA, AP