Most Asian markets rise after last week's rout

Mon Oct 6, 2008 3:32 AM EDT

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Most Asian stock markets recovered Monday after last week's historic sell-off as governments in Europe and beyond intensified efforts to stabilize the world's troubled financial system.

Hong Kong's Hang Seng Index, which tumbled more than 7 percent Friday, rose about 478.80 points higher, or 3.24 percent, at 15,275.67.

In Australia, the S&P/ASX200 index was up 4.71 percent in response to a government plan to guarantee bank and other lender deposits for three years. The benchmark plunged over 8 percent on Friday, its biggest single-day fall ever.

South Korea's benchmark gained 2.8 percent and Singapore's key stock measure was up 2 percent. But indices in Shanghai and the Taiwan benchmark lost more than 3 percent.

Japan's market, where the Nikkei 225 tanked nearly 10 percent Friday to close out its worst week in history, was closed for a public holiday.

The region's markets showed signs of life after leaders of the 15 euro-zone countries unveiled measures Sunday to prop up the region's ailing financial institutions. Under the plan, governments would guarantee new bank debt until the end of 2009, allow governments to help banks by buying preferred shares, and vowed to rescue important failing banks through emergency recapitalizion.

In the U.S., investors were waiting to see if the Treasury Department's newly announced plan to buy equity in troubled banks would help stabilize the volatility on Wall Street. Lawmakers have urged quick action by President George W. Bush on the effort, to be funded by the $700 billion bailout he signed Oct. 3.

Investors were still highly cautious, though, worried about eroding economic conditions, shrinking company earnings and further market turmoil, analysts said. There could be more selling ahead if individual investors, spooked by the steep declines in stock prices, continue to yank money from mutual funds and asset managers.

"You have a situation of global forces selling, which is outweighing optimism about political endeavors at the moment," said Benjamin Collett, head of hedge fund sales trading Daiwa Securities SMBC Co. in Hong Kong. "You have to assume that we're going to go lower, that the risk is to the downside."

Wall Street futures indicated a sharp rebound is in store for the major indexes ahead of the opening bell on Monday. Dow Jones industrials futures rose 235 points, or 2.8 percent, to 8,605. Nasdaq 100 futures rose 38.5, or 3 percent, to 1,321.00; and Standard & Poor's 500 futures added 31.8, or 3.5 percent, to 922.80.

In a volatile session Friday in New York, the Dow Jones industrial average fell 128, or 1.49 percent, to 8,451.49, gyrating within a 1,000 point range. The average had its worst week on record in both point and percentage terms.

Elsewhere in Asia, Indonesia's key index was down 3.7 percent Monday after the lifting of a trading suspension, imposed last Wednesday amid a freefall in share prices. Investors seemed little encouraged by government measures to free up liquidity, including easing regulations for share buybacks and corporate financial reserve limits.

Oil prices rebounded, with light, sweet crude for November delivery up $2.04 at $79.74. The contract fell Friday $8.89 to $77.70, the lowest price since Sept. 10, 2007.