Nikkei rebounds from 2-day sell-off

Markets in Asia rebounded smartly after Nikkei changed direction following a two-day heavy sell off.

Japan's Nikkei surged 6% to 9,094 a day after falling as much as 10%. After Friday's devastating earthquake and tsunami, followed by the radiatin leaks in nuclear stations, Japanese bourses had crashed 16% in two days. However, investors remained jittery after news of an aftershock and blasts in Fukushima. Blue chip companies were in the limelight. TRading volumes were noticeably higher than the average.

Asian markets also received a filip from US 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.

Analysts said the markets went up because of short-covering by the traders - both domestic and foreign players. "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.

Market players were also still keeping an eye out for Japanese companies and insurers selling their hefty foreign asset holdings and repatriating funds to cover costs from the nuclear crisis, quake and tsunami, a factor that could drive the yen higher.

Meanwhile, the Bank of Japan was checking currency rates with banks in the capital city of Tokyo. The dollar edged up slightly to 80.90 yen but was still not far from a record low of 79.75 hit against the Japanese currency in 1995.

The euro was subdued after Moody's downgraded Portugal's ratings by two notches and was last down about 0.2% on the dollar for the day. Worries that Japan will have to issue more debt to pay for the cost of reconstruction have hit long-term Japanese bond yields and the spreads of Japanese sovereign credit default swaps.

"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.

Seoul Composite gained 1.7% at 1,958. Straits Times and Shanghai Composite added 1.2% each, while Taiwan Weighted advanced 1% in trades. In Europe, CAC and DAX were in te positive zone. DAX jumped 1% to 6,708. CAC was up 0.3% at 3,792. However, FSE was unchanged at 5,695.