TOKYO - Major Asian markets recovered from early plunges Friday on hopes that Washington will soon propose measures to keep the U.S. economy from sliding into a recession. Investors snapped up shares that had been beaten down in recent weeks.
Meanwhile, in Europe, major indicators edged up in London and Paris and eased in Germany.
In Tokyo, the region's biggest market, the benchmark Nikkei 225 stock index rose 0.6 percent to 13,861.29, reversing an opening 3 percent plunge in the wake of an overnight drop on Wall Street.
Hong Kong's blue chip Hang Seng index rose 0.4 percent to 25,201.87 after plummeting as much as 3.9 percent in morning trade.
Investors were heartened by news that U.S. President George W. Bush is expected to outline his position later Friday on an emergency economic stimulus package that is being negotiated in Congress. Bush told congressional leaders that he favors income tax rebates to spur the economy, which has been battered by a credit crisis and slowdown in its housing market.
"The reports that Mr. Bush may have a plan for the subprime mortgage crisis made the Nikkei rise," said Noritsugu Hirakawa who monitors stock trading at Okasan Securities Co. in Tokyo. "Japanese stocks may be bottoming out."
Worries about a slowdown in the U.S. economy — a major export market — have dragged down Asian markets for most of the last two weeks, including a gut-wrenching rout on Wednesday.
Friday morning, it appeared that trend would continue as investors reacted nervously to an overnight plunge on Wall Street, unexpectedly weak U.S. manufacturing figures and dismal housing starts data.
But as the day progressed, investors bought up shares, especially those viewed as less exposed to the U.S. economy, causing several markets to recover. By the day's end, markets in China, South Korea and Taiwan were also higher.
"After declining by so many points, more than 3,000 in five days, the Hong Kong market is really cheap now. It represents good value," said Francis Lun, a general manager at Fulbright Securities in Hong Kong.
Gainers in Hong Kong included Industrial & Commercial Bank of China, up 5.4 percent, and China Telecom, which rose 2.8 percent. In Japan, Nippon Steel Corp. jumped 5.2 percent and property company Sumitomo Realty & Development Co. surged 8 percent.
Others markets, however, fell sharply. India's benchmark index dropped 3.5 percent, and in Philippines' key index sank 2.5 percent.
Some speculation emerged in Hong Kong that the U.S. Federal Reserve might cut interest rates before their next meeting on Jan. 29-30 — and perhaps even later in the day.
"We bet on a 50 basis-point rate cut by the U.S. Fed before the FOMC meeting later this month, with a good chance tonight," said Ernie Hon at ICEA Securities, referring to the policy-setting Federal Open Market Committee.
Beyond alleviating concerns about the American economy, a rate cut by the Fed would also benefit the local market, particularly property stocks. Hong Kong rates tend to track U.S. rates because of the local currency's peg to the U.S. dollar.
Still, investors around the world remain jittery about the full extent of the subprime mortgage crisis in the U.S., which has led to a credit crunch and billions of dollars (euros) of losses at major American investment banks Citigroup and Merrill Lynch & Co. due to write-downs of bad assets.
And recent signs of slower U.S. consumption has added to concerns that the American economy might contract, weakening demand for Asian electronics, autos, clothing and other exports.
Castor Pang, a strategist with Sun Hung Kai Financial in Hong Kong, said market were "in a seesaw situation."
"Investors don't have a direction," he said. "They're waiting for news out of the U.S."
In Europe, London's FTSE 100 rose 1.31 percent, Frankfurt's DAX slipped 0.05 percent and Paris' CAC advanced 0.28 percent.
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