Asian Markets End Higher as Banks Gain

Asian markets ended mostly higher Thursday, lifted by banks and financials. Japan and South Korea both closed 2 percent higher with Australia finishing almost 3 percent higher, buoyed by a Wall Street rebound on optimism that a rescue for U.S. bond insurers may be in the making.

The yen [JPY-TN 106.65 -0.13 (-0.12%)] pulled back from 30-month high against the U.S. dollar as appetite for higher yielding assets and currencies returned. Growing expectations that another swinging interest rate cut from the Federal Reserve next week -- coming on top of this week's emergency 75 basis-point slash -- to stabilize the U.S. economy also lent support to markets. The mood remained wary, however, as investors still chewed over the prospect of a U.S. recession.

New York's insurance regulator pressed major banks on Wednesday to put up billions of dollars to support ailing bond insurers. The news pushed the Dow and S&P up more than 2 percent by the close of New York trade.

Banks across the region rose on hopes of this bond bailout, as fears over further credit-related writedowns receded. Japan's Mitsubishi UFJ Financial Group, Australia's Macquarie Group, Hong Kong's HSBC Holdings and Singapore's DBS Group were all moving higher.

In Tokyo, the Nikkei 225 Average [JP;N225 13092.78 263.72 (+2.06%)] closed up 2.1 percent. Rises in other Asian stock markets also helped the Nikkei gain, with battered property shares such as Mitsui Fudosan, surging on a wave of short-covering and banks up in the wake of their U.S. cohorts.

South Korea's KOSPI closed 2.1 percent higher, as investors cheered possible U.S. measures to assist mortgage insurers, while strong earnings results boosted market heavyweights LGElectronics and Hyundai Motor. Hyundai, South Korea's top auto maker, gained 2.61 percent after reporting quarterly operating profit more than doubled, beating forecasts. The numbers were fueled by higher sales and a softer won.

Australia's S&P/ASX 200 Index rose 3.1 percent, extending their rebound to a second day, as hopes that U.S. bond insurers would be bailed out helped restore confidence in banks, and bargain hunters looked for cheap deals. Tracking gains in Wall Street banks, the top local banks led the market higher, with National Australia Bank climbing 4.1 percent.

Hong Kong stocks rose in volatile trade as gains on Wall Street boosted investor confidence, prompting buying across the board, with mainland financials outperforming after falling sharply this week. Hong Kong Exchanges and Clearing, which was also knocked down in this week's selloff, rallied 9.8 percent in heavy trade. The market fell shortly after a strong open, and swung in and out of positive territory before closing 2.3 percent lower in reaction to news of huge losses at French bank Societe Generale.

China's Shanghai Composite Index ended 0.3 percent higher, continuing a rebound that began on Wednesday, as coal miners surged but policy worries hit banking stocks. Traders cited China's severe coal shortage, which investors believe will help big coal producers even though the government has been ordering them not to raise prices.