(Adds European markets, quotes, updates prices)
By Louise Heavens
SINGAPORE, Jan 25 (Reuters) - Stocks in Asia extended gains
to more than 4 percent on Friday as a U.S. tax stimulus
package, reassuring jobs data and the prospect of another
Federal Reserve rate cut eased fears the world's top economy
will slide into recession.
Banking shares shrugged off an astounding $7 billion rogue
trader scandal at French bank Societe Generale <SOGN.PA> and
energy stocks also jumped as oil prices recovered on waning
recession fears.
Japanese government bond futures had their sharpest fall in
a year and a half as a third straight day of gains in the
Nikkei <> while gold and platinum both hit record highs.
Europe's stock markets were tipped rise with financial
bookmakers predicting Britain's FTSE 100, Germany's Dax
<> and France's CAC-40 <> to open 1-1.3 percent
higher.
U.S. stock index futures pointed to modest gains on Wall
Street later.
Global stock markets tumbled earlier this week as fears
mounted that the U.S. economy was heading towards recession,
before recovering on hopes policy makers were acting to blunt
the worst effects of a slowdown.
Analysts said SocGen's unwinding of its position may have
contributed to the slide.
"It looks like the trading loss at Societe Generale indeed
played a role in the steep fall in European markets on Monday,"
said Kim Jeong-hwan, a strategist at Woori Investment &
Securities in Seoul.
"Unlike previous mortgage-related writedowns by big banks,
this one is not a structural loss, so investors are taking a
relief. What investors are most fearful is uncertainty, rather
than an accidental loss the size of which has been already
identified, albeit huge."
Stocks in Tokyo, Sydney and Seoul extended gains to 1.5 to
3.5 percent to claw back all or much of this week's losses.
MSCI's index of Asia Pacific stocks excluding Japan
<.MIAPJ0000PUS> rose 4.5 percent by 0613 GMT, paring
year-to-date losses to around 10 percent.
President George W. Bush and congressional leaders agreed
on Thursday on a $150 billion package of tax rebates and
business incentives meant to ward off a recession in the
world's largest economy. [].
Although the idea did little to revive Wall Street when it
was touted last week, the fact that an swift agreement was met
gave investors confidence, as did weekly U.S. jobless claims,
which fell to a four-month low.
SOCGEN SHOCKER
Among banks, Japan's Mitsubishi UFJ Financial Group
<8306.T> and Australia's Macquarie Group <MQG.AX> rose nearly 8
percent, shrugging off news that a trader at Societe Generale
was accused of racking up a $7 billion loss in bad bets on
stocks in the biggest trading scandal in investment banking
history. []
France's prime minister reassured investors that SocGen's
troubles were isolated from the malaise sweeping global
financial market after a meltdown in U.S. sub-prime credit
markets.
The financial sector also drew support from news that
troubled U.S. bond insurer Ambac may be in talks with a buyer.
[]
Tokyo's Nikkei <> ended up 4.1 percent -- its biggest
daily percentage gain since March 2002. The benchmark is down
1.7 percent on the week and 11 percent so far this year.
In Hong Kong, gains in global bank HSBC <0005.HK> <HSBA.L>
helped the Hang Seng notch up a 5.3 percent gain, while
Australian shares <> climbed 5 percent -- their biggest
daily gain in a decade -- to add 2 percent this week.
"The panic's gone out of the market," said Angus Gluskie,
portfolio manager with White Funds Management.
Expectations of a further interest rate cut by the U.S.
Federal Reserve next week has helped to stabilise market
sentiment and put focus on fundamental company valuations
following the market rout earlier this week, he said.
"On most people's fundamentals, a lot of stocks in the
market appear to be undervalued," said Gluskie.
BONDS SLIDE
Japanese government bonds suffered their biggest single-day
drop in a year and a half, hurt by a wave of selling as surging
Tokyo stocks prompted investors to dump safe-haven debt.
March 10-year futures <2JGBv1> slid 0.90 of a point and the
benchmark 10-year bond yield <JP10YTN=JBTC> jumped 9.5 basis
points to 1.480 percent.
Treasuries were steady in Asia after a sell off in New
York, with two-year notes yielding of 2.318 percent <US2YT=RR>.
The dollar edged up to 107.41 yen <JPY=> as the broad
recovery in global stock markets from a frantic sell-off
encouraged appetite for higher yielding currencies.
U.S. crude <CLc1> rose 58 cents to $89.99 a barrel after
jumping nearly 3 percent in the previous session to $89.41 a
barrel.
Spot gold hit a record $914.50 an ounce on dollar weakness,
supply concerns, firm oil and expectations of more U.S.
interest rate cuts. Platinum <XPT=> hit another record high of
$1,618.50.
(Additional reporting by Kim So-young in Seoul)
(Editing by Lincoln Feast)
