(Updates prices, details on Japan crisis)
* Asian stocks stabilise as Nikkei rebounds from big losses
* More upbeat Federal Reserve view also helps calm nerves
* Nikkei up 4.4 pct but Japan still battling nuclear crisis
* Yen slips vs dlr after coming close to record high
* Oil extends losses to 3-week low despite Mideast unrest
By Raju Gopalakrishnan
SINGAPORE, March 16 (Reuters) - Asian financial markets
rallied on Wednesday, with Tokyo stocks rebounding nearly 4.5
percent after a steep two-day sell-off on Japan's killer
earthquake and unfolding nuclear crisis.
Other Asian stock markets were also higher, but news of
another fire at the earthquake-damaged Fukushima Daiichi nuclear
plant north of Tokyo and fears of more radiation leaks kept
investors on edge.
"The market doesn't care about any fundamentals today. All
eyes are on the nuclear plant and the Nikkei will move according
to the news about the plant," said Norihiro Fujito, a senior
investment strategist at Mitsubishi UFJ Morgan Stanley
Securities.
Asian markets also received a filip from U.S. stocks, which
closed down but off lows as a more upbeat view from the Federal
Reserve helped limit Japan-related losses. The Fed stuck with
its ultra-loose monetary policy but said the economy was gaining
traction.
Tokyo's gains were led by short-covering by hedge funds,
analysts said, adding that the market was still extremely
volatile.
"The rebound is pretty strong as investors realised they may
have panicked a bit too much yesterday," said Fujio Ando, senior
managing director at Chibagin Asset Management.
"But it's mostly short covering by both domestic and foreign
players, and not honest, active buying, because nuclear worries
are still strong."
Japan's Nikkei average surged over 6 percent at one
point, clawing back about a third of its losses since a massive
earthquake and tsunami hit the country on Friday, but then
slipped back below the psychologically important 9,000 point
level.
By midday, it was at 8,981 points, up 4.37 percent. However,
it was still down 12 percent from Friday's close. Osaka Nikkei
futures were up 2.08 percent at 8.820.
Australian shares were up around 0.5 percent, led by
a relief rally in uranium producers Paladin and Energy
Resources of Australia , which had sunk on fears that
many countries would scale back or suspend their nuclear power
programmes in light of Japan's woes.
Stock markets in South Korea , Taiwan , and
Hong Kong were also up and the MSCI Asia-ex-Japan index
was up 0.67 percent.
The yen slid to around 80.8 to the dollar, on fears of
intervention by the Bank of Japan after the currency surged
toward its 1995 historic high of 79.75. Speculators were betting
that the Japanese government and companies would liquidate
overseas assets to pay for reconstruction.
The euro was subdued after Moody's downgraded
Portugal's ratings by two notches and was last down
about 0.2 percent on the dollar for the day.
"Event risk is going to play a huge role in deciding what
the yen does this week," UBS currency strategist Gareth Berry
told Reuters Insider.
"The key thing to watch really is what happens to the Nikkei
index in Japan and if equities rebound from their lows. That
will help support risk appetite and that will lead to a slightly
weaker yen.
"The other thing to watch is how things unfold at the
nuclear power plants. Any deterioration there is probably going
to lead to further yen strength and conversely, as we hope the
situation resolves itself safely, we could see risk appetite
improve and that will naturally lead to a slightly weaker yen."
Brent crudeoil futures fell 75 cents to $107.77 a
barrel, a three-week low, as the Japanese crisis offset
increasing tensions in Bahrain. U.S. crude slid nearly
70 cents to $96.53.
Spot gold was up at $1,398 per ounce, but was yet to
fully recover ground after investors sold off bullion to cover
stock market losses.
(Additiopnal reporting by Anuradha Kanwar, Editing by
Richard Borsuk)
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http://blogs.reuters.com/globalinvesting
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http://blogs.reuters.com/macroscope
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