A passer-by walks past an electronic stock board in downtown Tokyo Friday, Oct. 10, 2008. Japanese shares nose-dived more than 10 percent in morning trade Friday as panicked investors dumped stocks following massive overnight losses on Wall Street and on growing fears over a global recession. The benchmark Nikkei 225 index lost 974.12 points, or 10.64 percent, to close the morning session at 8,183.37. (AP Photo/Itsuo Inouye)
HONG KONG – Relieved investors stormed back into global markets Thursday, sending stock indices in Hong Kong, South Korea and Japan surging by double digits, after the U.S. Federal Reserve slashed interest rates to help revive the world's largest economy and opened new credit lines with central banks.
Hong Kong's Hang Seng Index led the charge in Asia, shooting up 12.8 percent to 14,329.85, and South Korea's key stock index soared a record 12 percent to 1,084.72.
Japan's Nikkei 225 stock average gained 10 percent percent to 9,029.76 as exporters like Toyota and Sony got a boost from the yen continuing to retreat from a 13-year high against the dollar last week.
Benchmarks in Australia, Singapore, Taiwan and the Philippines added 4 percent or more. Russia's two main indices were also up sharply.
The markets were primed for an explosive move after plunging in recent weeks.
"This is panic buying after panic selling," said Linus Yip, a strategist at First Shanghai Securities in Hong Kong.
Wall Street futures suggested U.S. markets were poised to open higher. Dow Jones industrial average futures were up more than 2 percent.
As trading opened in Europe, stock measures in Britain, France and Germany were moderately higher.
The Federal Reserve's overnight move to cut its key interest rate by half a percentage point was widely expected but still provided a reason to sustain the regional rise that began Tuesday following days of punishing declines.
Hong Kong's de facto central bank followed by cutting its key lending by the same amount as the Fed and Taiwan reduced its key interest rate by a quarter point. In Japan, speculation mounted that the central bank would cut its key rate, already at a low 0.5 percent, at a meeting Friday.
Before the Fed acted, China also lowered its rates by just over a quarter point. The Shanghai Composite index was up 2.9 percent.
Markets also took heart from an announcement that the Fed would temporarily supply new lines of credit worth up to $30 billion to the central banks of South Korea, Brazil, Mexico and Singapore to help relieve the global credit crisis.
"You're seeing some pretty aggressive action by the central banks. That's giving people confidence and obviously these markets are very oversold," said Tim Rocks, Asia strategist at Macquarie Securities in Hong Kong. "We've seen some genuine buying ... for the first time investors willing to pick up some of the outrageous bargains out there."
The $30 billion facility is the latest in a series of swap arrangements where the Fed provides dollars for reserves of the other nations' currencies.
The Fed said the new credit lines were designed "to help improve liquidity conditions in global financial markets" by increasing the global availability of U.S. dollars. The move appeared to help loosen lending among the region's banks. Hong Kong's interbank offered rate, also known as Hibor, for three-month loans slid to 3.39 percent from 3.54 percent.
Oil prices continued to strengthen. Light, sweet crude for December delivery climbed another $1.77 to $69.27 a barrel in Asian trade on the New York Mercantile Exchange. The contract rose $4.77 to settle at $67.50 overnight.
In currencies, the dollar rose to 98.78 yen from 97.59 late New York Wednesday and up sharply from 91 yen last Friday.
Investors in Asia shrug off Wall Street's mixed finish. The Dow Jones industrial average closed down 74.16, or 0.82 percent, at 8,990.96. The S&P 500 index fell 10.42, or 1.11 percent, to 930.09, but the Nasdaq closed higher.
Japan's Sony Corp. rose 11.6 percent, even after the company reported late Wednesday that its net profit for the July-September quarter plunged 72 percent. Toyota Motor Corp. jumped 11.4 percent.
South Korea's battered financials powered higher after the Fed's moves. KB Financial Group Inc., the holding company for top South Korean lender Kookmin Bank, soared 9.4 percent.
In Australia, resource giant BHP Billiton Ltd. gained 8.8 percent on the back of rising commodities prices. Chinese upstream oil producer CNOOC Ltd. rocketed up 22 percent.
Markets in India were closed for a public holiday.