Central banks lift marts

GLOBAL MARKETS

Asian stocks rose, following their biggest drop in five months, as the region's central banks moved to ease a credit crunch sparked by losses on higher risk mortgages.

The Morgan Stanley Capital International Asia-Pacific Index added 0.2 per cent to 149.45 in Tokyo. The benchmark dropped 3 per cent on August 10, the most since March 5, to close at its lowest in more than two months.

Japan's Nikkei 225 Stock Average advanced 0.2 per cent to 16,800.05. It earlier fell as much as 0.2 per cent after a government report showed the economy expanded at a slower pace last quarter.

China's CSI 300 Index fell 0.1 per cent. Kweichow Moutai dropped on concerns that costs will rise after a government report showed inflation accelerated. Australia's S&P/ASX Index added 1.3 per cent, the region's biggest gain. Thailand's market is close today for a holiday.

Kookmin Bank and National Australia Bank, the two nations' biggest lenders, rose after countries including South Korea said they are prepared to add cash into their financial systems if required.

"I don't think the risk aversion will feed on itself,'' said Leo Krippner, head of investment strategy at AMP Capital Investors (NZ), which manages $7.3 billion in assets. "Central banks have shown they are prepared to step in. For us, the global economy is still rolling along OK.''

Europe

European stocks rose for the first time in three days after Morgan Stanley recommended buying shares in financial companies. Axa and Credit Suisse Group paced the advance.

The Dow Jones Stoxx 600 Index added 1.1 per cent to 366.66 in London. The Stoxx 50 jumped 1.3 per cent, and the Euro Stoxx 50, a measure for the euro region, rose 1.2 per cent.

National benchmarks advanced in all of the 18 western European markets. The UK's FTSE 100 gained 1.7 per cent, France's CAC 40 added 0.9 per cent, and Germany's DAX increased 0.7 per cent.

Imperial Chemical Industries, the UK maker of Dulux paints, climbed after accepting a takeover bid and Henkel agreed to buy businesses from the company's US unit. BHP Billiton and Vedanta Resources led mining stocks higher as copper gained in Asia.

US stocks recovered from a global sell-off August 10, erasing most of the Dow Jones Industrial Average's 213-point drop, after the Federal Reserve added $38 billion to banks to stem a crisis of confidence in credit markets. Asian stocks rebounded today from their biggest drop in five months.

"Shares continue to be an attractive asset for investors over the medium term, given a healthy economic backdrop and reasonable prices,'' said Edward Bonham Carter, chief executive of Jupiter Asset Management in London. "So this setback can be viewed as a potential buying opportunity.''