* Nations more coordinated in response to crisis
* Yen edges higher as caution rules
* Damage to credit markets needs time to fix
(Updates prices, other markets)
By Kevin Plumberg
HONG KONG, Oct 13 (Reuters) - Most Asian stock markets rose
slightly on Monday after policymakers around the world took
increasingly bold steps to rescue the financial system,
including guaranteeing bank desposits and taking stakes in
banks.
However, the yen and gold also edged up, highlighting
investor caution and an unwillingness to dive back into risk
taking, especially with credit markets still barely
functioning.
U.S. stock futures <SPc1> rose 2.9 percent, pointing to a
sharply higher open on Wall Street, after the U.S. government
said it would inject capital directly into financial
institutions, and European leaders hatched a plan that included
buying debt that banks issue, both of which may help free the
flow of precious credit.
Global equity markets were gutted last week, and investors
even liquidated positions in safe havens like government bonds
for cash, on dwindling hopes that anything could be done to
keep the global economy from sliding into recession.
Japan's stock market plunged 24 percent last week, twice
what it lost in the week of the 1987 crash, while U.S. stocks
dropped 18 percent, their biggest weekly decline ever.
"The market was looking oversold so it was ripe for a
bounce, it just needed a bit of good news," said David Cassidy,
chief equities strategist at UBS in Sydney.
Australia's benchmark S&P/ASX 200 index <> was up 3.2
percent, clawing back some of last week's 16 percent decline,
on a blanket guarantee of all bank deposits from the Australian
government.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> climbed 1.6 percent after slumping by more than
a fifth last week.
Hong Kong's Hang Seng index <> edged up 0.2 percent
after losing 16.2 percent last week. China Mobile shares
<0941.HK> were the biggest boost to the index, though CNOOC
Ltd's 3.2 percent decline curbed gains.
South Korea's KOSPI <> rose 1.3 percent, after closing
on Friday at the lowest since July 2006, and Singapore's
Straits Times index <.FTSTI> inched up 0.2 percent after last
week hitting its lowest since December 2004.
Japan's markets and the U.S. Treasury market were closed
for holidays on Monday.
The rally among financial sector shares was uneven.
Australia and New Zealand Banking Group's <ANZ.AX> stock was up
7.7 percent, but HSBC <0005.HK> was nearly unchanged.
SOME OPTIMISM, A LOT OF CAUTION
Panic about the fate of the global financial system ripped
apart credit spreads and sent volatility soaring last week.
Wall Street's best known fear gauge, The Chicago Board
Options Exchange Volatility index (VIX) <.VIX> roared to an
all-time high of 76.94, having more than trebled in the last
month.
The spread of 3-month London interbank offered rates, the
borrowing rate used between some large banks, over the 3-month
U.S. Treasury bill yield widened to a record 459 basis points,
after blowing out 359 bps in the last month. The spread is
essential to proper functioning of lending markets as it
indicates perceived counterparty risk over a so-called
risk-free rate.
The widespread measures announced over the weekend appear
to have supported confidence among investors that policymakers
will coordinate their efforts to stem the worst financial
crisis since The Great Depression.
However, the sort of rapid damage inflicted to the
financial system and the radical measures being employed to
mend it will likely have deep repercussions.
"A palpable sense of a turn in the markets this morning
demands a cautionary warning. There will be consequences for
global governments circumventing banks' core disintermediation
roles in the credit and cash markets," said Brett Williams,
credit analyst with BNP Paribas in Hong Kong in a note.
The euro pulled back to 134.30 yen <EURJPY=R>, down 0.6
percent on the day after having bounced as high as 137.65 yen
on the relief rally in stocks. The dollar fell 1.1 percent to
99.56 yen <JPY=>.
The price of spot gold <XAU=> rose 1.5 percent to $860.65
an ounce, helped by the weaker U.S. dollar against the euro,
after tumbling 7 percent on Friday as investors closed out of
positions and stayed on the sidelines.
U.S. light crude futures were up 3.4 percent to $80.62 a
barrel <CLc1> in a relief rally after hitting the lowest
settlement since Sept. 2007 on Friday.
(Additional reporting by Miranda Maxwell in MELBOURNE)
(Editing by Ian Geoghegan)
