By Rafael Nam
HONG KONG, Feb 25 (Reuters) - Asian financial shares
rallied on Monday, pushing up stocks and denting bonds across
the region, with Tokyo's Nikkei up more than 2 percent, after
talk of a rescue plan for a U.S. bond insurer eased worries
about the outlook of global credit markets.
But U.S. recession fears lingered, continuing to pressure
the dollar against other major currencies, while geopolitical
concerns in Iran and Turkey lifted oil prices towards $99 a
barrel.
Some analysts said the fate of bond insurers, and the
implications on global credit markets, could keep stock gains
in Asia short-lived after suffering double digit losses this
year.
"It's impossible to call an end to it," said Eric Betts,
equities strategist at Nomura Australia. "First, it was
subprime and then different investment banks and now it's
insurers. It has to go all the way through the food chain
probably."
Financial firms such as South Korea's Woori Financial Group
<053000.KS> and Japan's Millea Holdings <8766.T> gained after
news on Friday of a rescue plan for Ambac Financial <ABK.N>
sparked hopes the bond insurer will maintain its top credit
ratings, averting sell-downs of the debt it has guaranteed.
Lenders including Citigroup <C.N> and UBS <UBSN.VX> may
announce a rescue for Ambac by Monday or Tuesday, a person
familiar with the matter told Reuters. []
The MSCI's index of Asian stocks excluding Japan rose 1.2
percent as of 0150 GMT, with stocks in Korea <> and
Australia <> up around 1 percent each. Taiwanese shares
<> gained over 2 percent.
Japan's Nikkei <> rose more than 2 percent, with
shares getting an additional boost on a British media report
that China's sovereign wealth fund planned to buy as much as
$10 billion in Japanese stocks and may also purchase a large
stake in oil and gas developer Inpex Holdings <1605.T>.
[]
Although Asian financial firms have so far avoided the
extent of credit- and subprime-related writedowns at other U.S.
and European lenders, markets as a whole have suffered from a
lack of investor confidence that has spread worldwide.
The prospects of a U.S. recession have also hurt many stock
markets in Asia, with the MSCI index of Asian equities
excluding Japan down 11 percent this year as of last week.
Australian asset manager Allco Finance Group Ltd <AFG.AX>
slumped 61 percent on its return to trade following a two-week
suspension when talk had swirled that the group was in sale
talks and it had twice postponed its earnings announcement.
Allco on Monday said it planned to sell non-core assets
following a business restructure as it seeks to cut its debt to
avoid high funding costs. It posted a 14 percent drop in
first-half profit. []
US RECESSION WORRIES
Bonds fell, with Japanese government bond figures slipping
towards a two-month low as investors appeared more willing to
add riskier assets to their portfolios. March 10-year futures
<2JGBv1> fell 0.26 point to 137.23.
But concerns linger, with the dollar remaining pressed
against the euro, dogged by market expectations the U.S.
Federal Reserve will continue lowering interest rates to avert
a sharp slowdown in the world's largest economy.
The euro <EUR=> stood at around $1.4826 to the dollar, down
from a near three-week high of $1.4863 struck on Friday, while
the Japanese yen <JPY=> was steady against the greenback.
Oil prices rose nearly a dollar following Iran's warning on
Sunday that more U.N. sanctions against it would be "costly" to
Western powers, sparking talk the world's fourth-largest oil
exporter would cut crude exports. []
The gains were also powered after Turkish troops engaged
Kurdish PKK rebels in close combat on Sunday that left scores
dead in a major ground offensive in northern Iraq.
[]
U.S. crude futures <CLc1> were up 67 cents at $99.48 a
barrel.
