Asian Stocks Post Modest Gains

By Elaine Kurtenbach

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.