Most stock markets in Asia and the Pacific rose on Wednesday, on hopes the Bank of Japan and the US Federal Reserve will cut interest rates this week in a bid to spur economic growth, while credit markets showed further signs of recovery.
In Japan, the Nikkei ended up 7.7%, breaking back through the 8,000-point barrier to end at 8,211.90, after plumbing its lowest since 1982 on Tuesday.
The index is still down 20% in October, prompting speculation that Japanese banks have taken big hits on their domestic portfolios and will report sharply lower earnings.
Asia-Pacific stocks outside Japan climbed 2.3% after touching a four-year low on Tuesday, according to an MSCI index.
Hong Kong's Hang Seng index rose 1.4% after soaring 14.% on Tuesday in the biggest rally in 11 years. However, in South Korea, the Kospi closed down slightly at 968.97 after shooting up more than 7% earlier in the day.
Attractive valuations in almost every industry inspired Wednesday's stock market rally, after a brutal sell-off that has seen Japan's Nikkei index fall as much as 40% in the past month. But many investors feared the gains may be short-lived.
In Australia, the S&P/ASX200 index was up 1.34%.
New Zealand's NZX 50 ended the trading day 2.2% higher to close at 2746 on turnover of $88 million.
Contact Energy was up 51 cents to $7.15, Telecom fell 6c to $2.21 and Fletcher Building rose 8 cents to $5.61. Retailer The Warehouse rose 17c to $3.82.
On Wall Street, shares ended with a 10% surge on Tuesday.
Interest rate cuts expected
Central banks around the world were expected to lower benchmark interest rates further in coming days to shore up sputtering growth amid the worst financial upheaval in 80 years.
The Fed is widely expected to cut its key rate for the ninth time since September 2007 on Wednesday, and the Bank of Japan is expected to consider lowering its policy rate at a meeting on Friday.
The Bank of England and the European Central Bank were both forecast to lower borrowing costs next week.
How much any of these actions will turn around near-term prospects for major economies is unclear, especially since the US labour market is forecast to have lost nearly 180,000 jobs in October and economists from JPMorgan to UBS see the global economy sliding into recession.
