TOKYO - STOCKS rebounded on Friday in Asia as world leaders headed to Washington to craft a joint strategy to tackle the worst financial crisis in decades and thwart a deep global recession.

'The G20 will need to deliver some good news or we'll see a sharp drop in stocks on Monday,' warned NAB Capital strategist John Kyriakopoulos.

Japanese Prime Minister Taro Aso will tell world leaders his country is ready to lend up to 100 billion dollars (S$151 billion) to the International Monetary Fund for financial lifelines to crisis-hit emerging countries, his government said.

The gains in stocks came despite another raft of bleak economic news.

France narrowly avoided following Germany into recession, but its economy barely grew in the third quarter, while a plunge in new car sales in Europe signalled tough times ahead for the region.

French-Belgian bank Dexia posted a 1.54-billion-euro quarterly loss while the BBC reported that Royal Bank of Scotland would cut about 3,000 jobs worldwide.

Asian markets snapped a three-day losing streak as investors scooped up beaten-down stocks, but analysts warned the outlook remained bleak as fears mounted of a long and deep global economic downturn.

'The rally is just driven by bargain hunting after the sharp dips,' said Mr Kazuhiro Takahashi, general manager at Daiwa Securities SMBC in Tokyo.

Japan's Nikkei index ended 2.72 per cent higher, while Sydney finished with a gain of 1.4 per cent and Shanghai rose 3.05 per cent.

The yen rose as currency dealers fretted over the US economy. The dollar slipped to 97.12 yen, down from 97.67 in New York late Thursday. The euro dropped to 1.2736 dollars from 1.2779.

'There was no logical reason as to why shares rose, and worries remain over how the US will handle the financial crisis,' said Mr Yosuke Hosokawa, chief forex strategist at Chuo Mitsui Trust Bank.

The rebound in stocks came despite data showing a steep drop in both imports and exports in the United States, highlighting the slowdown in the world's biggest economy.

Germany on Thursday announced its economy, Europe's biggest, had fallen into recession in the third quarter.

But France narrowly avoided slipping into recession in the third quarter of 2008 with growth of 0.14 per cent compared to the second quarter, Economy and Finance Minister Christine Lagarde said.

China, which recently announced a stimulus package worth 586 billion dollars, said its economy remained fundamentally strong and should maintain fast growth, playing down concerns over a slew of weaker data this week.

'The origin of the financial crisis is outside the country and its impact on our financial system is limited. The fundamentals of our economy are still good,' National Development and Reform Commission vice-chairman Mu Hong said.

The current financial crisis is rooted in the so-called subprime loans in the United States - mortgages to buy houses and other forms of credit extended to underqualified consumers with less than solid credit histories.

The G20 summit, which starts late on Friday with a working dinner at the White House, is expected to set down a number of economic goalposts and a dateline to prevent the ongoing financial meltdown from turning into a lengthy recession.

'The leaders attending this weekend's meeting agree on a clear purpose: To address the current crisis, and to lay the foundation for reforms that will help prevent a similar crisis in the future,' US President George W. Bush said on Thursday.

KUALA LUMPUR
Malaysian share prices closed flat on Friday after investors bought selected blue chips ahead of the weekend, dealers said.

Dealers said trading was volatile with some bargain hunting by investors but pre-weekend profit-taking narrowed gains.

The Kuala Lumpur Composite Index was up 1.06 points or 0.12 per cent to closed at 881.65 while turnover was at 718.74 million shares valued at 854.67 million ringgit (S$359.4 million).

Losers outpaced gainers by 276 to 274.

A technical rebound after a three-day losing streak aided by a rebound on Wall Street, firmer regional bourses but 'relatively poor set of quarterly earnings by local companies and uninspiring earnings growth outlook encouraged investors to sell into strength,' a dealer told Dow Jones Newswires.

The dealer said the bourse was expected in the 850-900 range next week.

Gaming company Genting lost 1.77 per cent at 4.44 ringgit and top bank Maybank gained 0.95 per cent at 5.20. Telekom Malaysia rose 2.89 per cent at 2.85 ringgit while Tenaga lost 0.81 per cent at 6.15.

SHANGHAI
Chinese share prices jumped 3.05 per cent on Friday as they tracked a Wall Street rally buoyed by investor optimism over Beijing's economic stimulus push, dealers said.

The benchmark Shanghai Composite Index, which covers A and B shares, closed up 58.83 points to 1,986.44 on turnover of 87.8 billion yuan (S$19.5 billion).

The Shanghai A-share index added 61.79 points, or 3.05 per cent, to 2,086.68 on turnover of 87.6 billion yuan, while the Shenzhen A-share index gained 24.18 points, or 4.40 per cent, to 573.69 on turnover of 39.9 billion yuan.

HONG KONG
Hong Kong share prices closed 2.4 per cent higher on Friday, tracking gains across Asian markets as bargain-hunters looked to take advantage of recent tumbles, dealers said.

The benchmark Hang Seng Index closed up 321.31 points at 13,542.66.

Turnover was light at 44.53 billion Hong Kong dollars (S$8.65 billion).

TOKYO
Japanese share prices gained 2.72 per cent on Friday, breaking a three-day losing streak as bargain hunters snapped up shares ahead of a key summit on the global financial crisis.

Tokyo took a cue from Wall Street, which surged in late trade on bargain hunting despite a raft of gloomy economic data out of the world's largest economy.

But dealers said that the Tokyo market could fall back next week unless leaders of the Group of 20 major economies manage to take concrete action at this weekend's summit in Washington.

The Tokyo Stock Exchange?s benchmark climbed 223.75 points to finish at 8,462.39 after having jumped more than five per cent in early trade.

The broader Topix index of all first-section shares rose 9.38 points or 1.12 per cent to 846.91.

'The rally is just driven by bargain hunting after the sharp dips,' said Mr Kazuhiro Takahashi, equity trading information chief at Daiwa Securities SMBC.

Exporters rallied after the dollar jumped against the yen overnight, although the greenback eased back in Asian trade on Friday.

A stronger dollar makes Japanese exports more competitive overseas.

Chip-testing equipment maker Advantest jumped 9.1 per cent to 1,278 yen and disk-maker TDK rose 7.3 per cent to 3,250 yen.

Kubota, Japan's top agricultural machinery maker, gained 6.4 per cent to 551 yen. -- AFP, BERNAMA, THOMSON REUTERS, AP