Asian stocks surge in early trading after overnight Wall Street rally

Cassie Biggs, THE ASSOCIATED PRESS
HONG KONG - Asian markets rallied Friday, further recovering from their plunge earlier this week, as investors took heart from gains on Wall Street overnight and positive figures about the U.S. economy.

Investors also welcomed details of a tax rebate for U.S. consumers announced as part of President George W. Bush's economic stimulus plan. The tax rebate will put $600 to $1,200 in most tax filers' pockets.

"The markets are reacting to news Bush and Congress have agreed to accelerate tax rebates for U.S. consumers so they can go out and buy more exports from Asia," said Francis Lun, a general manager at Fulbright Securities in Hong Kong.

Hong Kong's Hang Seng Index jumped nearly six per cent in early trading before trimming some gains. By midmorning, it was up 1,138 points, or 4.83 per cent, at 24,667 points. The index fell 2.2 per cent the previous day.

In Tokyo, Japan's benchmark Nikkei 225 index extended its gains for a second straight session, rising 367.05 points, or 2.8 per cent, to 13,459.83 by midday. It gained 2.1 per cent Thursday.

Markets in Australia, South Korea, Taiwan and the Philippines were also up.

On Wall Street on Thursday, the Dow Jones industrials rose more than 100 points, partly lifted by data that suggested the U.S. job market is holding up. The U.S. Labor Department said the number of people seeking unemployment benefits last week fell for a fourth straight week.

Investors were also cheered by strong gains Thursday in Europe.

Hong Kong gainers were led by property issues on expectations the U.S. Federal Reserve would again slash rates when it meets next Tuesday and Wednesday. Hong Kong banks usually match the U.S. rate cuts as the Hong Kong dollar is pegged to the U.S. currency.

Asian markets have had a volatile week, buffeted by worries the United States, a key export market and the world's biggest economy, was going to contract.

On Monday and Tuesday, all Asian markets suffered steep losses before rebounding Wednesday and Thursday after the U.S. Fed slashed lending rates by 0.75 per cent.

The Hong Kong index bucked Thursday's upward trend. After rising three per cent in the morning, it slumped 2.3 per cent later in the day after French bank Societe Generale announced a massive write-down in subprime assets and detailed how a junior trader had lost the bank more than $7 billion. Analysts described Hong Kong's drop as a "knee-jerk reaction" to the French bank's news.

"We should have ended up yesterday," said Rob Hart, an analyst at Morgan Stanley.

"But there was no where else to pull money from when the Societe Generale news came out. Tokyo and Seoul had already closed."

The Dow Jones industrial average rose 0.88 per cent to 12,378.61 Thursday, following a 2.5-per-cent surge Wednesday. The Nasdaq composite index advanced 1.9 per cent to 2,360.92.

U.S. stock index futures were also up, suggesting that rally could continue. Dow futures were up 37 points, or 0.3 per cent, to 12,402, while Nasdaq futures were up 15.5 points, or 0.8 per cent, to 1,852.5.

© The Canadian Press, 2008