Japan's market was by far the best performer: the Nikkei 225 index jumped 589.98 points, or 7.7 per cent, to 8,211.90 after the US dollar rebounded against the yen overnight, easing pressure on exporters.

But elsewhere, the regional rally fizzled by the afternoon as traders cashed in profits amid fresh worries about company earnings.

Hong Kong's Hang Seng Index, up nearly 5 per cent in early trading, trimmed its gain to just under 0.9 per cent in volatile trade after a spectacular 14.4 per cent rise the day before.

Australia's S&P/ASX200 climbed 1.3 per cent.

South Korea's index pared its morning gains and dropped 3 per cent as bank stocks pulled back on fears they may cut dividends after the government guaranteed their foreign currency loans.

The region's broader move higher came after a massive overnight advance on Wall Street, where the Dow Jones industrial average soared nearly 11 per cent to 9,065.12 following rises in Asian and European markets earlier in the day.

The US Federal Reserve is expected to cut its target fed funds rate by half a point to 1 per cent on Wednesday amid signs the world's largest economy is facing recession.

Markets also were holding out hope the Bank of Japan would trim its interest rate - already at a low 0.5 per cent - when it meets on Friday after The Nikkei business newspaper reported that such a move was being considered.

'The optimism is fueled by the prospect of rate cuts', said Singapore-based investment analyst Nicole Sze of Bank Julius Baer, which manages about US$300 billion (S$450 million) in assets.

'Wall Street's rally brought some extra confidence to the market, reminding investors that selling might have been overdone and this might be a good time to pick some values'.

'Having said that, this doesn't necessarily signify the absolute bottom and that things will be rosy from here', he said.

As trade opened in Europe, Britain's FTSE 100 index advanced about 5 per cent and France's CAC-40 was up more than 6 per cent.

Germany's DAX, which surged more than 10 per cent in Tuesday trade, fell back nearly 2 per cent. Russia's RTS index was higher.

Wall Street futures were lower, signaling a weaker opening for the major US indices in Wednesday trade. Dow and S&P futures were both down about 2 per cent.

A weaker yen also prompted investors in Tokyo to buy exporters like Toyota Motor, which shot up 10.4 per cent. Honda Motor jumped 18 per cent even though on Tuesday it reported a 41 per cent drop in quarterly profit and lowered its forecast for the full year.

The yen has softened since jumping to about 91 to the US dollar on Friday. On Wednesday, the dollar was trading at about 97 yen after surging above 98 yen on Tuesday, but up sharply from 94 yen late on Monday.

Japanese financials also rose, with megabank Mitsubishi UFJ Financial Group up 6.4 per cent.

Stronger commodity prices helped shares of Australia's BHP Billiton, the world's largest mining company, which improved 3.7 per cent.

CNOOC, a unit of China's biggest offshore oil and gas producer, soared 10.8 per cent in Hong Kong after posting a 69 per cent rise in third-quarter revenues, thanks the surge in global crude prices.

Oil prices rose, led largely by the rebound in global markets.

Light, sweet crude for December delivery advanced US$2.10 to US$64.83 a barrel in Asian trade on the New York Mercantile Exchange.

The contract slid 49 cents overnight to settle at US$62.73, the lowest closing price since May 15, 2007.

KUALA LUMPUR
Malaysian shares fell 0.4 per cent on Wednesday due to profit-taking, dealers said.

The Kuala Lumpur Composite Index shed 3.03 points to end the day at 829.41, off an intraday high of 850.25.

Turnover was moderate at 650.626 million shares valued at 1.19 billion ringgit (S$498 million dollars) with decliners outpacing gainers 392 to 295 as investors awaited the US Federal Reserve's decision on interest rates later on Wednesday.

Dealers said they expected the bourse to trade in a broad range of 800-850 on Thursday.

'Investors locked-in gains and opted to stay on the sidelines ahead of the (Fed?s) decision's on interest rate later today,' one dealer told Dow Jones Newswires.

'Tomorrow the market is likely to take its cue from the performance on Wall Street, but expect profit-taking into strength to cap gains,' the dealer added.

HONG KONG
Hong Kong shares closed 0.8 per cent higher on Wednesday, as financial stocks shed some of the gains following their biggest rally in more than a decade, dealers said.

The benchmark Hang Seng Index rose 105.78 points to 12,702.07.

Turnover was 59.23 billion Hong Kong dollars (S$11.39 billion).

Heavyweight HSBC was down 4.28 per cent and Bank of China dropped 3.35 per cent after a strong rebound on Tuesday.

SHANGHAI
Chinese share prices closed down 2.94 per cent on Wednesday led lower by securities firms after one leading broker posted poor third quarter earnings, dealers said.

The benchmark Shanghai Composite Index, which covers A and B shares, closed down 52.01 points at 1,719.81 on turnover of 35.4 billion yuan (S$7.8 billion).

The Shanghai A-share index lost 54.50 points, or 2.93 per cent, to 1,806.97 on turnover of 35.3 billion yuan, while the Shenzhen A-share index shed 11.53 points, or 2.27 per cent, to 496.89 on turnover of 14.5 billion yuan.

TOKYO
Japan's Nikkei stock index soared 7.74 per cent by the close on Wednesday, rebounding for a second straight day as investors hunted for bargains after a strong rally overnight on Wall Street.

The benchmark rose 589.98 points to 8,211.90 points, helped by a weaker yen and hopes of an interest rate cut by the Bank of Japan on Friday. -- AFP, THOMSON REUTERS, AP