Asian financial markets resisted Wall Street's overnight slump and moved higher on Friday, led by strong gains in Tokyo and Hong Kong.

The US Deputy Treasury Secretary, Lawrence Summers, called on Tokyo to persevere with measures to restore domestic demand-led growth.

Mr Summers, speaking at the end of a whirlwind tour of Asian states, also said implementation of this week's new economic reform package was crucial for Indonesia, although he believed the situation in that country had stabilised since last week.

Tokyo stocks ended 6.11% higher at 16,046.45 on hopes of further government steps to boost the domestic economy, fuelling a rally in the yen to 128.63 to the US dollar from 130.18 earlier.

Slight recovery in Hong Kong amid job fears

Hong Kong also gained, shrugging off New York's 92-point slide as well as the domestic jitters that dragged blue-chips 7% lower on Thursday after a week of bad news.

The Hang Seng index ended the session 3.74% stronger at 8,900 after hitting a high of 9,044.

Rumours that companies were suffering from debt management problems seemed to fade a little prompting dealers to start spending again. But they said the bounce may only be a temporary respite from the black clouds still gathered over Asia.

"We're still worried about credits around town," said one head trader. "All these markets are very thin. There's a bit of a short-squeeze going on, but nothing really has changed."

Fears about redundancies at investment banks outweigh worries over the ailing markets.

On Thursday, Schroders Plc said it would axe 200 jobs in Asia, following the loss of 700 Hong Kong jobs caused by the liquidation of Peregrine Investment Holdings.

Impending Chinese New Year holiday kept trading down

BZW Asia laid off 75 people on Monday and Indosuez W.I. Carr Securities cut 72 jobs last month.

The approach of Chinese New Year, on January 28th, and Wall Street's holiday closure on Monday helped to keep trade lacklustre throughout the rest of the region, dealers said.

Mixed fortunes

Elsewhere in Asia shares were mixed, with Manila pulling back while Bangkok, Singapore and Kuala Lumpur gained. The Malaysian ringgit, Philippine peso and Thai baht were flat to firmer.

• Indonesian stocks were up 5% in late trade. But the rupiah weakened as currency markets doubted Jakarta's ability to implement sweeping reforms it pledged to deal with the country's crippling economic crisis. The rupiah fell to 8,950 against the US dollar from Thursday's close of 8,025 as banks bought up the greenback in early trading.
• The Malaysian government may be forced to raise interest rates to contain inflationary pressure arising from currency depreciation following advice from the International Monetary Fund. Its managing director, Michel Camdessus, told a news conference that, in addition, the country's central bank seemed ready to reduce credit growth to ease such pressures.
• The Singapore dollar recovered from early losses to trade at 1.7465/15 against the US dollar.
• In South Korea, the won pared early gains, trading at 1,614 compared to 1,530 earlier. Shares lost some momentum, ending 3.53% lower, with traders warning that the recent rally could soon run out of steam. The index is up more than 30% since the start of the year, with some major stocks reporting 100% gains.
• The Taiwan dollar continued to trade around the T$34 level.
• The US Defence Secretary, William Cohen, is in Thailand to dispel fears that his country has abandoned Thailand as it sinks to its lowest economic ebb. His talks with the Thai Foerign Minister, Surin Pitsuwan, will be dominated by Thailand's struggle to pay its defence bills.

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