Asian stock markets escaped the worst of the fallout from another Wall Street slump, with Tokyo staging a stunning rebound on Thursday despite concern about a new banking crisis in Japan.
The Dow slipped below 10,000 and the Nasdaq fell through 2,000 Wednesday, following a slump on exchanges worldwide brought on by fears of the deepening trouble in Japan and an uncertain outlook for the US economy.
But European stock markets were steady on opening and the impact on Asia was limited, with Tokyo's Nikkei-225 bouncing off its lowest intra-day level since December 1984 to close at 12,152.83, up 309.24 points or 2.6 percent.
The rebound was triggered by remarks from Finance Minister Kiichi Miyazawa during an emergency government meeting convened to look at economic measures to boost the ailing stock market.
Miyazawa reportedly agreed to channel government funds to a proposed body to buy the cross-shareholdings of banks and corporations, which is aimed at propping up the stock market.
"Today's sharp recovery path began with his comment," said Mizuho Investors Securities trader Masatoshi Sato. "Some bullish players were even saying the Nikkei has now hit bottom."
The recovery came after banking shares had been hammered on a new alarm over the sector's financial health sounded by ratings agency Fitch IBCA, which on Wednesday placed the ratings of 19 leading Japanese banks on negative review.
"Plunging share prices surely erode banks' assets, and there are concerns about whether or not the banks can write off their bad loans," said Kazue Mayuzumi, senior market analyst at Nikko Securities.
"But Tokyo is reacting in a less panicky manner as investors expect the government to introduce concrete measures soon. Now the Bank of Japan's return to the zero-rate policy seems unavoidable."
Japanese press reports said the central bank could return to the policy abandoned in August when it meets on Monday, a day before the US Federal Reserve convenes.
Firm action by the central banks of the world's two biggest economies could ease investors' jitters. But Asian players would be wary for the time being, said a regional strategist at Vickers Ballas in Singapore.
"Investors are still not very convinced that things will get better," he said. "Most of them are still cautious, unless of course there is extremely good news on the home front."
Singapore's Straits Times Index gained 1.66 points to end at 1,793.84.
Nasdaq futures went up during Asian hours "and markets in Japan and Hong Kong were also sharply higher, so traders were taking these leads to push up technology issues," said a local brokerage dealer.
In Hong Kong, the Hang Seng index advanced 173.33 points to close at 13,504.17 with bargain-hunting investors heartened by the Tokyo rally.
Australia's All Ordinaries share index closed 22.6 points lower at 3,188.4, capping its losses despite the Wall Street volatility and a slump in the Australian dollar to a new low against the greenback.
"It was a good day," said Hartley Poynton institutional adviser Paul Lucas.
"I think the Australian market performed well despite all the gloom and doom we have seen in the press and politics," he said.
The Korea Stock Exchange index inched down 1.45 points to 541.83. "The local market will likely remain unstable, fluctuating with the US and Japanese markets for the time being," said Jo Jae-Hoon of Daewoo Securities in Seoul -- TOKYO (AFP)
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