Asia recovers after Fed cut

GLOBAL MARKETS/ STOCK REPORT

Asian stocks rebounded from the biggest two-day drop in 18 years, led by banks and mining companies, after the US Federal Reserve lowered borrowing costs to ward off a recession.

HSBC Holdings and Mitsubishi UFJ Financial Group gained after the Fed cut its benchmark rate to 3.5 per cent in its first emergency reduction since 2001.

BHP Billiton, the world's largest mining company, jumped the most in 20 years following a rally in prices of copper and gold. Sun Hung Kai Properties climbed in Hong Kong after the city also lowered rates, supporting demand for real estate.

"The Fed's move will obviously help the global economy and the problems we're seeing right now will work themselves out eventually," said Peter Chiang, chief equity strategist at DBS Asset Management in Singapore.

"There's still some concern on the impact of a US slowdown." The MSCI Asia Pacific Index added 3.9 per cent to 137 as of 7:02 pm in Tokyo, its biggest gain since August 20. The index dropped 10 per cent in the past two days, the steepest decline since April 1990.

Japan's Nikkei 225 Stock Average added 2 per cent to 12,829. Hong Kong's Hang Seng Index surged 11 per cent, the steepest gain since February 1998, and Asia's biggest advance.

Infosys Technologies paced gains in India, where the Sensex climbed for the first time in eight days. The rebound in most Asian markets on Wednesday helped trim the MSCI regional benchmark's 2008 loss to 13 percent.

EUROPE
European stocks fell, led by HBOS, Vodafone Group and Royal Dutch Shell.

The Dow Jones Stoxx 600 Index lost 0.4 per cent to 314 as of 9:12 am in London, after rising as much as 1.6 per cent earlier.

Stocks erased gains after European Central Bank President Jean-Claude Trichet said the bank remains committed to fighting inflation, damping expectations that borrowing costs may decline anytime soon.

HBOS, Britain's biggest mortgage lender, slipped 1.8 per cent to 648 pence after ABN Amro Holding cut its recommendation to "sell".

US
US stock-index futures declined, pointing to a sixth straight day of losses for the Standard & Poor's 500 Index, after Apple forecast profit that missed analysts' estimates.

Apple dropped in Europe. EBay, the world's largest online auctioneer, and Motorola fell before reporting earnings. US stocks fell for a fifth day yesterday after the Fed's biggest interest-rate cut in 23 years failed to persuade investors the economy will avert a recession.

The central bank unexpectedly reduced its benchmark lending rate by 0.75 percentage point to 3.5 per cent.