Page last updated at 09:25 GMT, Thursday, 30 October 2008

US rate cut boosts Asian shares

Trading room in Tokyo, 29 October 2008
The Nikkei is still 20% down for the month

Asian shares have risen sharply, boosted by Wednesday's decision from the Federal Reserve to cut US interest rates from 1.5% to 1%.

Tokyo's Nikkei 225 had its third strong day in a row, rising 9.96%, although it is still down 20% since the beginning of October.

In Hong Kong the Hang Seng index ended the day up 12.8%.

Korea's benchmark index rose a record 12% on news of a currency swap arrangement with the Federal Reserve.

Stimulus package

Sentiment in Japan was strong ahead of an announcement after the end of trading from Prime Minister Taro Aso of a second package of measures to boost the economy.

The 5 trillion yen ($51bn; 31bn) of measures was expected to include tax cuts for homeowners, support for small and medium-sized businesses and a cut in highway tolls.

The Bank of Japan is expected to cut interest rates on Friday for the first time in seven years.

"If I have to wrap things up in one word, it's still a rebound," said Soichiro Monji at Daiwa SB Investments.

"The question is how far the rebound can take the market, and that'll be difficult as the economy won't improve overnight and currency markets are still unstable."

Dollar funding

The Federal Reserve also boosted Asian markets with the news that it is providing $30bn of funding to South Korea, Singapore, Brazil and Mexico.

"With this deal, Korea secured a 'safe dollar supplier' in the Fed and that will ease concerns over a dollar liquidity shortage," said June Park, an economist at Woori Investment & Securities.

The news reversed a slump in Korean shares and also sent Singapore's markets up nearly 7% by the end of the morning.

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