Asia, Europe stocks soar on yen rise

Asia, Europe stocks soar on yen rise

TOKYO (Agencies): The Tokyo Stock Exchange's main index soared to its highest close in almost three months in heavy trading yesterday, boosted by a report that Japan will cut taxes to bolster the economy.

The 225-issue Nikkei Stock Average jumped 532.62 points, or 3.36 percent, closing at 16,362.89 - its highest since April 10.

The benchmark average now has climbed for six sessions, gaining almost 9 percent. On Tuesday, it gained 464.54 points, or 3.02 percent.

The dollar bought 138.24 yen in late afternoon, down 1.71 yen from late Tuesday in Tokyo and below its late New York rate of 139.16 yen.

Japanese financial markets continued their rally on growing expectations that the governing Liberal Democratic Party will propose a sweeping tax cut ahead of upper house elections July 12.

Investors are optimistic a tax cut would spur consumer spending, lifting Japan out of its worst recession since World War II.

Investors also took heart from recent signs that Japan is moving to clean up once and for all the bad loans that have plagued its banks since the collapse of real estate prices in the early 1990s.

"The Nikkei average rose in the past few days amid the government's progress in plans to set up the bridge bank," said Ken Okamura, strategist at Dresdner Kleinwort Benson (Asia) Ltd.

The broader Tokyo Stock Price Index of all issues listed on the first section gained 40.37 points, or 3.18 percent, to 1,270.75. The index had climbed 28.16 points, or 2.34 percent, the previous day.

A firmer yen helped Asian stock markets move higher yesterday, but volume was fairly low with Hong Kong, Taiwan and Thailand markets closed for holidays.

The volatile Korean stock market stole the show with a 6 percent gain despite some bad news from Moody's and worrying inflation and trade data.

Brokers said blue chip shares, such as Samsung Electronics and Pohang Iron and Steel (POSCO), which are most sensitive to the yen, drove the market.

The Korea Stock Exchange Composite Stock Price Index closed nearly 6 percent higher at 315.56 points.

Manila picked up more than 1 percent after President Estrada's inauguration yesterday while Kuala Lumpur moved ahead more than 3 percent and the Singapore market firmed as the Singapore dollar recovered some of its poise.

European stock markets held onto firm gains at mid-session yesterday as they celebrated a powerful rally in Tokyo and a show of strength from the yen.

London, Paris and Frankfurt were over 1 percent higher, ignoring overnight profit-taking on Wall Street which saw the Industrial Average closing down half a percent.

Swiss stocks hit fresh records, with the SMI hitting an all- time high at 7,952.2 points in the first minutes of trade and the all-share Swiss Performance Index reaching a high at 4,970.67.

Shares in car giants Volkswagen and Volvo jumped on a report that the two were in talks that could lead to a merger.