Asian stock markets rise after Bernanke comments

Wednesday February 25, 5:20 am ET
By Jeremiah Marquez, AP Business Writer
Asian stock markets rise after Bernanke comments boost Wall Street; Tokyo up 2.7 pct

HONG KONG (AP) -- Asian stocks rose Wednesday, taking their cue from Wall Street after U.S. Federal Reserve Chairman Ben Bernanke said the government had no plans to nationalize hard-hit banks and the recession might end this year.

Gains across the region were modest compared with U.S. markets, where the major benchmarks surged from near 12-year lows in a broad rally led by shares in financial companies.

Japanese shares snapped a three-day losing streak as the yen swooned to a three-month low against the dollar and amid speculation that the government may use public funds to buy stocks. The upswing came despite news the country's trade deficit hit an all-time high as global demand evaporates.

As in the U.S., investors found a measure of comfort in Bernanke's comments that formally nationalizing the banks to ensure their viability "just isn't necessary." In recent days, the prospect of nationalization has weighed heavily on markets because of fears it would dilute share prices and turn over major decision to government regulators.

After Wall Street closed, President Barack Obama told lawmakers money would be needed to rescue troubled banks beyond the $700 billion already committed last year. While vowing to lead the country to recovery, he stopped short of laying out specifics about his administration's bank turnaround plan.

Analysts were skeptical gains in U.S. and Asian equities would last.

The U.S. government may end up nationalizing the banks, but do so piecemeal rather than in a single injection, said Dariusz Kowalczyk, chief investment strategist for SJS Markets in Hong Kong.

"The political difficulty of nationalization is hampering efforts to jump-start the recovery, and I think the rally (on Wall Street) yesterday was only temporary," Kowalczyk said.

In Japan, the Nikkei 225 stock average rose 192.66 points, or 2.7 percent, to 7,461.22. Investors there jumped back into the market amid reports the goverment may expand an entity that's currently limited to buying stocks held by financial institutions and their cross-held shares. Earlier this month, Japan's central bank announced its own plans to buy stock holdings worth billions of dollars from financial institutions.

The upbeat mood offset news Japan posted a record trade deficit in January, with exports tumbling 46 percent from a year earlier. Its economy, the world's second-largest, shrank at its fastest rate in 35 years in the fourth quarter.

In Hong Kong, the Hang Seng rose 1.6 percent to 13,005.08 even as the government predicted the local economy would shrink for all of 2009 in its first full-year contraction since the Asian financial crisis. South Korea's Kospi was up 0.3 percent at 1,067.08.

Elsewhere, Shanghai's benchmark added 0.3 percent, India's stock measure advanced 0.7 percent and Taiwan's main index was 1.4 percent higher.

Overnight in New York, the Dow rose 236.16, or 3.3 percent, to 7,350.94. On Monday, the major indexes tumbled more than 3 percent, including the Dow, which fell 251 points and hit its lowest close since May 7, 1997.

Broader stock indicators also rebounded Tuesday. The S&P 500 index jumped 29.81, or 4 percent, to 773.14. On Monday, it logged its lowest finish since April 11, 1997.

U.S. futures were mixed. Dow futures were off 1 point at 7,303 and S&P500 futures fell 0.6, or 0.1 percent, to 769.20.

In currencies, the dollar continued its advance, rising to 97.03 yen from 96.70 yen. The euro fell to $1.2821 from $1.2861.

In oil, light, sweet crude for April delivery was changing hands at $40.39 a barrel, up 43 cents. Overnight, the contract, staged a late-session rally to settle up $1.52 at $39.96 on the New York Mercantile Exchange.