* Fed expected to cut, speculation grows of BoJ easing
* Yen edges up but stands lower on the week vs U.S. dollar
* Oil climbs above $65 as stocks rally
By Kevin Plumberg
HONG KONG, Oct 29 (Reuters) - Asian stocks and government
bonds rallied on Wednesday, on hopes the Bank of Japan and the
Federal Reserve will deliver interest rate cuts this week to
support the sharply slowing global economy.
Oil prices also rose as investors latched on to the upward
momentum in global equities, hoping for a sustained revival in
willingness to take risks for higher returns.
Attractive valuations in almost every industry inspired the
stock market rally, taking place less than two weeks after
Japan's Nikkei index posted its biggest single-day decline
since the 1987 crash.
The Fed is widely expected to cut its key rate for the
ninth time since September 2007 later on Wednesday, and the
Bank of Japan will consider lowering its policy rate at a
meeting on Friday, according to sources familiar with the
matter. []
How much either action will turn around near-term prospects
for the U.S. and Japanese economies is unclear, especially
since the U.S. labour market is forecast to have lost nearly
180,000 jobs this month and economists from JPMorgan to UBS see
the global economy sliding into recession.
The Nikkei <> jumped 7.7 percent, after plumbing the
lowest since 1982 on Tuesday. The index is still down 21
percent in October, causing speculation that Japanese banks
have likely taken big hits on their domestic portfolios.
"Hopes of a BOJ rate cut are everything," said Masayoshi
Okamoto, head of trading at Jujiya Securities in Tokyo. "But as
long as the dollar is below 100 yen there will be worries about
Japanese company earnings in the second half of this business
year, and this will limit the Nikkei's rebound."
Nomura Holdings Inc, <8604.T> Japan's largest brokerage,
posted its third consecutive quarterly net loss on Tuesday and
warned of potential losses on exposure to crisis-hit Iceland
and further write-downs on its stake in Fortress Investment
Group. <FIG.N>.
Asia-Pacific stocks outside Japan climbed almost 3 percent
after touching a 4-year low on Tuesday, according to an MSCI
index <.MIAPJ0000PUS>.
Wall Street overnight posted its second-biggest rise ever,
with the Standard & Poor's 500 index <.SPX> spiking 10.8
percent.
The U.S. dollar was down slightly on the day at 97.96 yen
<JPY=> compared with around 98.50 late in New York. Still, the
dollar has gained nearly 4 yen in three days as global equity
markets rallied.
The yen has received a powerful boost as Japanese investors
close out of overseas trades and bring money back home.
The two-year Japanese government bond yield, which moves in
the opposite direction to the price, hit a six-month low of
0.60 percent <JP2YTN=JBTC> in anticipation of a central bank
rate cut.
U.S. crude futures were trading up $2.81 at $65.54 barrel
<CLc1>, after rising as high as $65.80 just minutes earlier. In
the last month alone, oil has dropped $43 as a deep slowdown in
demand is factored in.
(Additional reporting by Elaine Lies in TOKYO, editing by
Dhara Ranasinghe)
