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By Kevin Plumberg
HONG KONG, Oct 14 (Reuters) - Asian stocks surged on
Tuesday, with Japan's Nikkei up more than 12 percent, after
world policymakers led by Europe readied plans to inject cash
into banks in the biggest effort yet to ease the global
financial crisis.
Government bond prices plummeted and the yen fell as
investors ditched low-risk investments to scoop up heavily
oversold shares after U.S. stocks posted record gains
overnight. In a single day on Monday, global stocks added $1.7
trillion in market value, according to MSCI.
"We're seeing a wave of short-covering here, but it's hard
to see how far the rebound will go," said Masayoshi Okamoto,
head of dealing at Jujiya Securities in Tokyo.
After plunging 24 percent last week, the Nikkei share
average soared 12.4 percent <> on Tuesday after a holiday
on Monday.
Australia's S&P/ASX 200 <> rose 5.9 percent after
posting its biggest daily gain since October 1997 on Monday.
Fears of a looming global recession were not dead but for
now the sweeping emergency steps being enacted by governments
reduced the immediate risk of a worldwide financial system
failure.
The U.S. government agreed on Monday to take $25 billion
stakes in several big banks in a bid to shore up the banking
system and arrest the financial crisis, sources familiar with
the situation said. The move follows pledges by the governments
of Britain, Germany, France and other European countries of
more than 1 trillion euros ($1.36 trillion) to bolster their
own banks. []
"Capital markets roar approval of the synchronized
recapitalisation and guaranteed programmes," said Brett
Williams, credit analyst with BNP Paribas in Hong Kong. "New
U.S. government initiatives rolling out this morning, in
parallel with those adopted by European jurisdictions
yesterday, could further underpin positive sentiment," he said
in a note.
Government bonds were hard hit.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
more than a full point in price, pushing the yield up to a
2-month high of 4.05 percent from 3.88 percent late on Friday
in New York. U.S. bond markets were closed on Monday for a
holiday but stock markets traded.
The benchmark 10-year Japanese government bond yield hit a
three-month high. The benchmark 10-year JGB yield climbed 8
basis points to 1.600 percent <JP10YTN=JBTC> after striking a
three-month high of 1.630 percent in early trade.
The yen dropped against major currencies. The U.S. dollar
rose to 102.95 yen from 102 yen <JPY=> late on Monday in New
York.
Gold rose more than 2 percent as rising oil prices boosted
its appeal as a hedge against inflation, but the rally in stock
markets could also cap gains.
Gold <XAU=> was trading at $845.00 an ounce, up $14.20 from
the New York notional close, having hit an intraday high of
$847.70 an ounce. It had dropped to $821 an ounce on Monday,
its weakest since Oct. 3.
U.S. crude oil futures <CLc1> rose more than 4 percent
overnight and another 2 percent in early trade on Tuesday on
hopes the financial crisis may ease. Light sweet crude futures
were trading around $83.00 a barrel. []
(Editing by Kim Coghill)
