GLOBAL MARKETS-Asian shares rally after Fed, dollar retreats

                                
 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.
                                
 Major European stock indexes were also set to gain, with
bookmakers predicting advances of between 0.7 and 1.3 percent.
                                
 The dollar fell in seesaw trade, a day after posting its
biggest one-day gain against the yen in a decade, though
remaining well above recent lows hit against other currencies
such as the euro -- 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 problem in the U.S. is that the banks don't have
enough capital to lend and we're not really that sure whether
the Fed action will fix that," said Damien Boey, equity
strategist at Credit Suisse in Australia.
                                
 "What's actually needed is for the Fed to buy up those
toxic or defunct assets that are going around. So at this
stage, we're very sceptical about this bounce."
                                
 The MSCI's measure of Asian stocks outside Japan
<.MIAPJ0000PUS> rose 3.3 percent as of 0608 GMT in a welcome
bounce for an index that is down some 20 percent this year.
                                
 Japan's Nikkei <.N225> rose 2.5 percent, coming back after
hitting its lowest since August 2005 on Monday, while shares in
Australia <.AXJO> jumped 4 percent.
                                
 Shares in South Korea <.KS11>, Hong Kong <.HSI> and India
<.BSESN> rose more than 2 percent each, while markets in Taiwan
<.TWII> and Singapore <.FTSTI> advanced more than 1 percent.
                                
 Shanghai's benchmark index <.SSEC> gained 1.4 percent
fuelled by rumours that the government would take steps to
boost the market, perhaps by cutting the stock stamp duty.
                                
 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 <0005.HK> and
Japan's Mitsubishi UFJ Financial Group <8306.T> also surged.
                                
 Though regional banks have been spared the extent of
write-downs 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. [ID:nN17621242]
                                
 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 earnings forecasts, although their quarterly
profit had more than halved. [ID:nN18227461]
                                
 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, with
China ordering banks on Tuesday to hold more of their deposits
in reserves instead of lending them out.
                                
  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). [ID:nT266446]
                                
 DOLLAR EASES
                                
 The dollar gained and waned, following a rally on Tuesday
when traders had reacted to the Fed's smaller-than-expected cut
in U.S. 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 98.80, down 1.2 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 $990.90, down
from a record $1,033.90 on Monday.
                                
 Oil prices, which had surged 3.5 percent on Tuesday,
retreated on expectations U.S. government data will show rising
crude and gasoline inventories in the United States. U.S. crude
for April delivery <CLc1> fell $1.08 to $108.34 a barrel.