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Asian Stocks Post Modest Gains

The Associated Press

SHANGHAI -- Asian markets rose modestly Wednesday after a surge on Wall Street Tuesday boosted sentiment across the region, while Tokyo shares were buoyed by fresh support for the wobbly financial system from the Japanese central bank.

Hong Kong's Hang Seng index led the region, gaining 1.9%, while Tokyo's benchmark Nikkei 225 stock average added 0.3% to end at 7,972.17.

The Japanese central bank said it was increasing its purchase of government bonds to keep ample cash in the monetary system following a two-day meeting at which it also decided to keep its key interest rate at 0.1%. The Bank of Japan also said it was considering providing loans to commercial banks as an option to shore up their capital bases.

"Investors took heart from the bank's moves. The Bank of Japan is not sitting still. It is taking action aggressively to ensure the smooth liquidity in the financial market," said Masatoshi Sato, a strategist at Mizuho Investors Securities.

South Korea's Kospi rose 0.5%, while Shanghai's benchmark Composite Index added 0.2%.

Australia's benchmark S&P/ASX 200 dipped 0.2% to 3,446.3 after miner Rio Tinto (RTP Quote) dropped 8.7% on worries over its deal with Aluminum Corp. of China(ACH Quote).

Wall Street got a surprise boost Tuesday, posting its fifth gain in six trading sessions, from a government report that home construction picked up in February. The news, which was unexpected, injected new vitality into a week-old rally.

Asian markets also have advanced strongly in recent sessions on signs of improvement among major U.S. and European banks. But many analysts are cautious and believe the rally has run its course for now.

The World Bank cut its forecast of China's 2009 growth to 6.5% from 7.5% because of plunging exports. But World Bank economists expressed confidence in Beijing's ability to keep the world's third-largest economy expanding amid global turmoil.

"We see China as a relative bright spot in a rather gloomy global economic picture," said David Dollar, the bank's country director for China.

As the market closed, Japanese electronics company Toshiba said it was naming a new president in a management reorganization aiming at dealing with Japan's crippling recession. The company's stock rose 0.4%.

In New York Tuesday, the Dow Jones Industrial Average jumped 179 points, or 2.5%, to 7,395.70.The S&P 500 index climbed more than 3%.

U.S. stock index futures were down modestly, pointing to a lower open on Wall Street Wednesday.

Stocks in London, Frankfurt and Paris were trading higher.

Oil prices fell, with benchmark crude for April delivery falling 27 cents to $48.89 a barrel in trading on the New York Mercantile Exchange.

In currencies, the dollar fell to 98.66 yen from 98.79 yen.

AP Business Writer Joe McDonald in Beijing, Associated Press Writer Shino Yuasa in Tokyo and Associated Press researcher Ji Chen in Shanghai contributed to this report.