Asian Markets Rise on Wall Street Gains

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LONDON — Asian stock markets rebounded Tuesday morning as investors cheered an overnight rally on Wall Street and snapped up beaten down shares on expectations of a U.S. interest rate cut later this week.

Japan's benchmark Nikkei 225 index jumped 2.7 percent at the opening before trimming gains. By midday, it was up 1.2 percent at 13,249.6. Hong Kong's blue-chip Hang Seng Index was up 1.8 percent in midmorning trading after rising as much as 2.3 percent.

Both markets — Asia's two biggest — tumbled more than 4 percent Monday on fears the U.S. economy, a major export destination, was entering a recession.

Lower stock prices were "giving investors a chance to re-enter" the market, said Paul Chan, chief investment officer at Invesco in Hong Kong.

Sentiment got a lift from Wall Street's gain on Monday, when investors in the U.S. took a dismal new home sales report as a sign the Federal Reserve will lower interest rates when its policy-making body meets Tuesday and Wednesday.

That would come right on the heels of a deep three-quarter-percentage-point cut in a key rate last Tuesday to 3.5 percent that sparked a rebound in stock markets worldwide after they plunged early in the week.

Investors speculate this week's interest rate cut will be either a quarter point or half point.

"If they don't cut rates, then we will probably see the markets fall again on Thursday," said Francis Lun, a general manager at Fulbright Securities in Hong Kong.

Lun said investors were also heartened by U.S. President George W. Bush's last state of the union address Tuesday in which he stressed the government's determination to reinvigorate the moribund economy with tax rebates.

Bush urged lawmakers to urgently approve a $150 billion plan in tax relief for families and incentives for businesses to invest in new plants and equipment.

"As we meet tonight, our economy is undergoing a period of uncertainty," Bush said. "And at kitchen tables across our country there is concern about our economic future."

Bush reassured Americans that their country's economy was robust but warned of a rocky road ahead in the short-term.

Many Asian countries are heavily reliant on U.S. consumers to buy their exports, and stock markets across the region have reacted sharply to grim economic data over the last few weeks pointing to a recession in the world's biggest economy. The U.S. economy has been battered by a housing slump and credit crunch triggered by a spike in defaults on risky mortgages that has led billions of dollars of bad assets at major U.S. and European banks.

In Hong Kong, gainers included export-related stocks such as Li & Fung, which jumped 6.1 percent. China Merchants added 5.1 percent while COSCO Pacific was up 4.5 percent.

China coal stocks listed in Hong Kong were also "hot," said Lun, on expectations that the prolonged and unexpectedly severe winter across China will drive demand for more coal.

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