SEOUL, South Korea - Asian stocks were mixed Tuesday as a big interest rate cut in Australia helped spur recoveries in several regional markets, sparking hopes that other central banks will lower rates to help loosen the global credit crunch.
The Reserve Bank of Australia surprised markets when it slashed its key rate a full percentage point to 6 percent — its biggest cut since 1992. Analysts had expected a half-point cut. The move sent Sydney's S&P/ASX-200 index, which had opened 3.7 percent lower, up 1.7 percent to 4,618.7.
Other markets rebounded after the bold move: Main indices in South Korea, Singapore and Taiwan all edged higher, staunching — at least temporarily — the gut-wrenching global market sell-off from Monday.
Unlike its Australian counterpart, the Bank of Japan announced it was keeping its interest rates unchanged at 0.5 percent, as expected. However, there is growing speculation that the BOJ may soon coordinate with the U.S. Federal Reserve and the European Central bank in an emergency policy move aimed at shoring up investor confidence.
"I suspect we'll be seeing other rate cuts before too long from other central banks," David Cohen, head of Asian economic forecasting at Action Economics in Singapore, said after the Australian move. Cohen added that he expects equities markets to be subject to "some pretty rough sailing for awhile yet."
Japan's benchmark Nikkei 225 index erased some of its early steep losses to close down 3 percent at 10,155.90 — still its lowest level in almost five years.
"Sentiment was really pessimistic as investors were worried over the course of the financial crisis," said Masatoshi Sato, a strategist at Mizuho Investors Securities Co. Ltd. "No one knows how and when this crisis ends."
But some investors in Japan said they were encouraged by a late day rally on Wall Street Monday as well as overall sentiment that stocks had fallen too far too fast, said Toshikazu Horiuchi, equity strategist at Cosmo Securities.
"There was a sense that the market was oversold," he said.
European markets opened lower Tuesday after plunges the day before when Britain's FTSE 100 index slid 7.9 percent and France's CAC-40 sank a stunning 9 percent, its worst performance ever.
The Dow Jones industrial average, down more than 800 points at one point Monday, recovered in the final 90 minutes of the session to finish down 370 points, or 3.6 percent, to 9,955.50, its first close below 10,000 since 2004.
U.S. stock index futures were higher, suggesting that trading in New York might open higher Tuesday morning. Dow futures were up 0.8 percent to 10,047.
Australian central bank Gov. Glenn Stevens said the bank had judged that a large cut in the cash rate was needed after studying the outlook for global growth and its likely effect on Australia.
"Conditions in international financial markets took a significant turn for the worse in September," he said in a statement, highlighting bank failures and "heightened instability" in markets. He also noted evidence of "a significant moderation in growth in Australia's trading partners in Asia."
Japanese automakers were among the biggest losers, partly due to the dollar's drop to 101 yen level overnight. Mitsubishi Motors Corp. fell 10.3 percent, Nissan Motor Co. fell 4.79 percent and Toyota Motor Corp. dropped 4.87 percent. On Tuesday, the dollar recovered to 102.85 yen.
In South Korea, investors steadily bought back shares after the sharp early drop, with the Korea Stock Price Index closing 0.5 percent higher at 1,366.1. Hong Kong's market was closed for a holiday.
The euro was trading at $1.3595 from $1.3516 late Monday.
Oil prices rebounded to above $90 Tuesday in Asia after plunging to an 8-month low Monday on concerns a significant slowdown in global economic growth will undermine demand for crude.