(Updates with share prices, BOJ, details)
By Rafael Nam
HONG KONG, March 19 (Reuters) - Asian stocks surged on
Wednesday as big interest rate cuts in the United States and
surprisingly resilient results from two top Wall Street banks
sent exporters higher and revived moribund financial shares.
The dollar fell on profit-taking a day after posting its
biggest one-day gain against the yen in a decade, though it
remained well above recent lows hit against other currencies --
bringing more relief to Asian exporters.
The stock rally dimmed the safe-haven appeal of gold and
bonds, while oil retreated from Tuesday's jump on expectations
for a fall in U.S. inventory data due later in the day.
Still, analysts warned against over-reacting to what has
been a volatile week, with Asian stocks just on Tuesday hitting
their lowest since August amid investor fears of the impact of
the financial crisis on the global economy.
"The Fed is showing strong leadership in addressing these
issues they are having and the market is being buoyed by the
fact that it is willing to move fairly quickly," said Tony
Russell, senior equities adviser at ABN AMRO Morgans in
Australia.
"It's very good to see a strong bounce to the market but I
don't think we're out of the woods just yet."
The MSCI's measure of Asian stocks outside Japan
<.MIAPJ0000PUS> rose 3.5 percent as of 0341 GMT, and was headed
for its biggest gain since Jan. 25 in a welcome bounce in an
index that had fallen some 20 percent so far this year.
Japan's Nikkei <> rose 3.1 percent, coming back after
hitting its lowest since August 2005 on Monday, while shares in
Australia also gained almost 4 percent.
Shares in South Korea <> and Singapore <.FTSTI> rose
more than 2 percent each, while Taiwan <> was up 2
percent.
Exporters such as South Korean chip maker Samsung
Electronics <005930.KS> were among the leading gainers on hopes
the U.S. rate cuts will reduce the pain from a U.S. economy
that many believe to be either in the brink of recession or
already in one.
The sector is facing a double threat to their earnings: a
potential slowdown in consumption in their top export market
and the threat of surging local currencies, which eats into
profits earned abroad and makes them less competitive.
Shares in financial firms such as HSBC's <0005.HK> and
Japan's Mitsubishi UFJ Financial Group <8306.T> also surged.
Though regional banks have been spared the extent of
writedowns seen at European and U.S. counterparts their shares
have still suffered from the spreading credit crisis.
IMPASSE AT THE BOJ
The Federal Reserve slashed U.S. interest rates on Tuesday
by a hefty three-quarters of a percentage point. The cut,
though less than many traders had expected, comes on the heels
of emergency measures over the weekend to ease a liquidity
crisis in credit markets. []
The Fed has now cut rates by an aggressive 3 percentage
points since mid-September, including 2 points this year.
Investors had already reacted with jubilation before the
Fed's move after Goldman Sachs <GS.N> and Lehman Brothers
<LEH.N> had topped forecasts, although their quarterly profit
had more than halved. []
The news was well received by investors who had fretted
about more casualties from the credit crisis following the fire
sale of Bear Stearns <BSC.N> to JPMorgan Chase <JPM.N> on
Sunday.
The Fed's aggressive easing contrasts with central banks in
the region that are enmeshed in a fight against inflation.
China ordered banks on Tuesday to hold more of their
deposits in reserves, though shares in Shanghai <> surged
3.6 percent as the monetary tightening was milder than feared.
In Japan, the search for a new central bank governor
continued after the country's upper house of parliament for a
second time voted down the government's nominee for the
position. Bank of Japan Governor Toshihiko Fukui is set to
retire later at midnight (1500 GMT). []
DOLLAR EASES
The dollar eased from a rally on Tuesday when traders had
reacted to the Fed's slightly smaller-than-expected cut in U.S.
interest rates by sending the greenback to its biggest one-day
gain against the yen in nine years.
The dollar climbed as far as 100.45 yen <JPY=> before
falling to around 99.35, down 0.6 percent from late U.S.
trading.
Some of the willingness to take riskier bets returned, with
gold down more than 2 percent. It last traded at $989.30, down
from a record $1,033.90 on Monday.
Japanese government bond futures slid as well, though June
futures <2JGBv1> rebounded to trade flat at 141.07.
Oil prices retreated from its 3.5 percent on Tuesday, amid
expectations U.S. government data will show rising crude and
gasoline inventories in the United States. U.S. crude for April
delivery <CLc1> fell $1.04 to $108.38 a barrel.
