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Asian stocks soar on US Fed rate cut

business Updated: Oct 30, 2008 11:36 IST

AFP
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An interest rate cut by the US Federal Reserve and its announcement of multi-billion-dollar currency swaps sent Asian stocks soaring on Thursday as signs emerged of a thaw in world credit markets.

The US central bank on Wednesday sliced its key rate by 50 basis points to 1.0 per cent, the second cut this month, to stimulate the world's biggest economy amid the worst global economic crisis since the Great Depression.

Asian shares rebounded sharply, extending gains made yesterday, in the wake of the cut and the Fed's currency swap deal with central banks in Brazil, Mexico, South Korea and Singapore to help them tackle the credit squeeze.

Japan's Nikkei rose 6.11 in early afternoon trade, extending a rebound into a third day, while stocks in South Korea leapt 11 per cent by late morning.

Shares rose 8.5 per cent in Hong Kong and 5.05 per cent in Singapore.

Shanghai was up 1.16 per cent after China's central bank also cut key interest rates yesterday in a bid to spur economic growth, the third such move in six weeks.

But analysts said markets could struggle to sustain the recovery -- after weeks of sharp falls -- given fears of a global recession.

"We believe the recent rise in stock prices is still only in the nature of an autonomous rebound," Ichikawa told Dow Jones Newswires.

The rebounds came as Japan's Prime Minister Taro Aso was set on Thursday to unveil a new multi-billion-dollar package to help Asia's largest economy weather the global economic crisis as he puts off high-risk elections.