Asian markets rally on hopes for RI, Japan

Asian markets rally on hopes for RI, Japan

SINGAPORE (Reuters): Signs that the economies of Indonesia and Japan are about to get an overdue boost spurred Asian markets to some strong gains yesterday , but traders remained wary ahead of concrete steps in both countries.

Japan's key stock index jumped nearly three percent on hopes the government would yield to mounting pressure for tax cuts after the passage of its budget later on Wednesday.

Indonesian markets had a false start after the announcement of details of the government's latest agreement with the IMF was put off to Thursday. But the market reacted warmly to news that a deal on a new package of economic reforms and targets had been struck.

Elsewhere, Hong Kong stocks were led sharply higher by index major HSBC Holdings, and Thai shares leapt 3.32 percent. South Korean stocks edged down, but regional currencies made steady gains, helped by the Indonesia package and a weaker dollar/yen.

The key 225-share Nikkei average closed up 397.90 points, or 2.49 percent, at 16,376.62. The yen firmed to 133 to the dollar from around 133.50.

Despite the delayed announcement in Jakarta and the assumption of a 4.0 percent GDP fall, traders said the fact a deal had been reached was good news. They said it should pave the way for the release of billions of delayed bail-out dollars from the IMF and other international bodies.

The JSX composite index closed up 3.9 points, or 0.74 percent, at 530.04 points. The rupiah moved firmed to around 8,400 to the dollar.

"The stock market has largely reacted positively to the news, but it's likely to be cautious optimism as players would wait for tangible results," said Charles Phoa, analyst with PT DBS Securities in Jakarta.

But other were skeptical.

"We cannot trade on this," said one senior dealer at a major Japanese bank, adding the market would rather focus on a key creditors' meeting on Indonesia's private debt in New York on April 15.

The Hang Seng Index surged 265.03 points, or 2.40 percent, to end at 11,314.46 after a high of 11,429.82.

"If you look at the market today, turnover is not very strong and all focus is now on Hongkong Bank (HSBC Holdings)," said Kelvin Tang, analyst at ImPac Asset Management.

Sentiment was also helped by market moves in Japan and Indonesia and by lower local interbank rates, brokers said.

Despite continued foreign buying encouraged by the country's first sovereign bond offering in New York, the Korea Stock Exchange composite index closed down 0.88 percent, or 4.05 points, at 455.53. The won edged higher against the dollar, eying the 1,400 level.

Bangkok shares ended a bleak 10-day losing streak and moved sharply higher. Brokers put the rise down to a technical rebound, saying many stocks in the banking, energy and finance sectors looked cheap at their current levels.

The composite SET index closed 14.29 points higher at 444.33.

Philippine shares also gained ground, helped by the regional mood, but trade was light. The main index rose 10.12 points to settle at 2,193.47.

Shares in Singapore moved smartly higher, but dealers said trading had been volatile and cautioned the gains could evaporate just as quickly.

"I don't think the rises look real," said a dealer with an Asian institution, adding the market remained concerned over the health of Malaysian financial system.

Malaysian stocks edged higher by the close, prevented from following other markets higher by steady foreign selling, dealers said. The benchmark Composite Index closed 0.51 of a point higher at 664.28 after dipping to a low of 657.08.

Markets in Taiwan were also subdued, the main index falling a fraction to 9,263.44.

European stock markets stayed lower in midsession yesterday with only Amsterdam and Brussels among the majors showing a cautious advance on good company results.

Most of the others, reacting to the Dow's overnight retreat from the 9000 level and ignoring gains to major indices in Asia, were content to freewheel in low volume ahead of today's Japanese budget, an upcoming G-7 meeting and the long Easter break.

The UK's FTSE 100 index slid nearly one percent in morning trade but had perked up to little more than half that by midsession.

Technical analysts were still bullish, predicting that the FTSE would not break below its 10-day moving average at around 6000 and would revive in the short-term to around 6130.

Germany's DAX index was hardest hit during the morning, with floor trade dipping nearly two percent and the electronic Xetra- DAX following it down later, also on the Dow's weaker close and profit-taking after its recent record run.

U.S. stocks in London were subdued in what traders identified as pre-Easter apathy.