Asian stocks surge as bank moves bring relief

Asian stocks jumped and bonds fell on Wednesday after a Lehman Brothers (LEH.N: Quote, Profile , Research) securities offering met strong demand, raising hopes that the worst of the credit crisis might be over.

A $19 billion (9.6 billion pounds) write-down by Swiss bank UBS AG (UBSN.VX: Quote, Profile , Research) reinforced the view that the banks were aggressively scrubbing their books clean of soured investments tied to the U.S. housing market
The change of mood boosted the dollar, which in turned pushed oil back down towards $100 a barrel The currency held on to its gains in early Asian trade.


"The market has become somewhat confident that banks can overcome this crisis," said Kosuke Hanao, head of currency sales at HSBC. "The dollar's rebound may continue for a month."

The euro was little changed from its level in late New York trade at $1.5600, in sight of Tuesday's one-week low around $1.5560 and well below a record high of $1.5905 hit last month.

The dollar was quoted at 101.80 yen, little changed here, too, after jumping around 2 yen on Tuesday.

Bank shares led stock markets higher, lifting Japan's benchmark Nikkei <.N225> 3.3 percent by Australia's S&P/ASX 200 <.AXJO> was up 2.8 percent and South Korea's benchmark KOSPI <.KS11> 2.2 percent. Seoul financials such as Kookmin Bank (060000.KS: Quote, Profile , Research) and Woori Finance Holdings (053000.KS: Quote, Profile , Research) surged more than 5 percent and Australia's Macquarie Group (MQG.AX: Quote, Profile , Research) rose more than 8 percent.

The share price jumps followed big gains in JPMorgan Chase & Co (JPM.N: Quote, Profile , Research), Bank of America (BAC.N: Quote, Profile , Research) and Citigroup (C.N: Quote, Profile , Research) on Tuesday, which helped to drive both the Dow average <.DJI> and the S&P 500 <.SPX> up more than 3 percent.

U.S. technology stocks also had a strong start to the quarter. Nasdaq <.IXIC> leapt more than 3 percent, helped by Microsoft (MSFT.O: Quote, Profile , Research), which rose 4 percent after saying it would not raise its takeover offer for Yahoo. (YHOO.O: Quote, Profile , Research).

But the buoyant sentiment in stocks drained enthusiasm for bonds. Japanese government bond futures followed U.S. Treasuries lower. June 10-year JGB futures dropped 0.30 point to 139.50 at the opening, before recovering to 139.72.


U.S. crude oil, which had settled down 60 cents on Tuesday at $100.98 a barrel after losing more than $4 on Monday, held steady in early Asian trade.

Gold regained some strength on a technical rebound after falling to a two-month low on Tuesday, when the rise in the dollar and the U.S. stock rally sparked selling in precious metals. Gold rose to $889.30/890.10 an ounce from $884.20/885.40 late in New York.