TOKYO - ASIAN stocks clawed back some ground in early trade on Wednesday after Wall Street rebounded overnight on hopes for a US government rescue for ailing Detroit automakers.
But the recovery from heavy losses the previous day was relatively modest and dealers said it was driven largely by technical factors, with sentiment still cautious following a recent flood of grim economic data.
Stocks rose 4.0 per cent in Shanghai, 1.8 per cent in Tokyo and 0.2 per cent in Sydney, after substantial falls on Tuesday. The Hong Kong market was up 1.4 per cent at the end of morning trade.
'The market continues to be influenced by US stocks, reversing recent losses slightly after the Big Three put forward their revamp plans,' said Hideaki Higashi, a strategist at SMBC Friend Securities.
Wall Street turned up on Tuesday as the Big Three Detroit automakers pressed Congress for billions of dollars in emergency loans to avert a potentially catastrophic collapse.
The Dow Jones Industrial Average rallied 270.00 points or 3.31 per cent, clawing back from a 679-point loss the previous day.
But Mr Higashi said the automakers would still face a bumpy road to clear negotiations with Congress before they get a bailout.
'The rescue plan could be diluted from what they want,' he warned.
'There are calls for the management to take responsibility and protect payrolls in the auto sector, which is considered the soul of America, unlike financial companies,' he said.
Wall Street was also boosted overnight by General Electric's better-than-expected business update.
European investors drew encouragement from news that finance ministers from all 27 European Union nations endorsed plans for a stimulus package totalling 200 billion euros (S$387 billion dollars), equivalent to 1.5 per cent of EU gross domestic product.
'Despite a lack of consensus amongst national governments, the European Commission's bailout package is giving hope to equity investors,' said Kim Forkes at Economy.com.
In London, the FTSE 100 closed 1.41 per cent higher on Tuesday, while Paris's CAC 40 added 2.35 per cent and Frankfurt's DAX jumped 3.12 per cent.
Investors are looking to central banks this week for the latest round of action to combat the worst financial crisis since the 1930s which is threatening to plunge the global economy into recession.
The European Central Bank and the Bank of England are both widely expected to slash interest rates on Thursday.
Economic news remained gloomy. Australia's economy grew just 0.1 per cent in the third quarter - its slowest pace in eight years, official figures showed.
'It is difficult to see the rally in equities being sustained and it will not take much in the way of more bad economic news to bring a dose of reality back,' warned analysts at the Calyon investment bank.
There were also signs that the Chinese economy is slowing. The yuan fell by its maximum daily trading limit for a second consecutive day on Tuesday.
The sudden drop in the value of the Chinese currency may signal a policy shift to prop up exports during the financial crisis, analysts said.
KUALA LUMPUR Malaysian shares closed 0.2 per cent higher on Wednesday as profit taking capped earlier gains from bargain hunters,
dealers said.
The Kuala Lumpur Composite Index gained 1.78 points to close the day at 847.53 in modest volume of 553.8 million shares after trading in a tight range
of 843.32 - 850.64.
SHANGHAI Chinese shares closed up 4.01 per cent on Wednesday after the country's sovereign wealth fund increased its stakes in the China Construction Bank, dealers said.
The benchmark Shanghai Composite Index, which covers A and B shares, closed up 75.78 points at 1,965.41 on turnover of 89.0 billion yuan (S$19.8 billion).
The Shanghai A-share index rose 79.44 points, or 4.00 per cent, to 2,063.85 on turnover of 88.6 billion yuan, while the Shenzhen A-share index advanced 23.02 points, or 3.89 percent, to 614.67 on turnover of 43.5 billion yuan.
HONG KONG Hong Kong share prices closed 1.4 per cent higher on Wednesday, as China stocks continued to lift the market on hopes of more stimulus measures by Beijing, dealers said.
The benchmark Hang Seng Index ended the day up 182.81 points at 13,588.66. Turnover was light at HK$37.97 billion (S$7.4 billion).
TOKYO Japanese stocks closed up 1.79 per cent on Wednesday, tracking an overnight rebound on Wall Street as hopes grew for a rescue of the Big Three US automakers.
The benchmark Nikkei-225 index rose 140.41 points to end at 8,004.10. The broader Topix index of all first section issues gained 12.07 points, or 1.53 per cent, to end at 799.19. -- AFP, BERNAMA
