Asian stocks rise after U.S. rally on bank plan

[SIZE="3"]Asian stock markets extended their rally Tuesday after Wall Street surged on hopes a U.S. plan to rid banks of festering debts at the heart of the financial crisis will revive growth in the world's largest economy.

The gains were somewhat muted compared to those in the U.S., where leading benchmarks jumped around seven per cent or more, Asian shares climbed ahead of Monday's announcement about the government's latest measure to heal the banking industry. Financial firms across the region once again helped lead the gains, while a sliding yen buoyed Japanese exporters.

Investors worldwide appeared comforted by the Obama administration's move to clean up as much as $1 trillion US in toxic securities and loans weighing down bank balance sheets — a key measure in the government's program to restore consumer and company lending so crucial to economic activity.

A dose of better-than-expected news about the other big U.S. economic problem, the housing slump, added to the upbeat mood.

Data showing a surprise increase in home sales fostered hopes the hard-hit housing industry might finally be stabilizing.

Asian markets have risen sharply recently, with Japan and Hong Kong's indexes each surging a stunning 20 per cent or more over the last two weeks.

But analysts cautioned investor sentiment, while recovering in the short term, was still fragile. Doubts about the U.S. plans — about how to price the assets and account for losses, among other issues — could smother in the coming days what many believe is still an abridged rally in a longer bearish trend.

"At the end of the day there has been no game changer even if the plan is implemented perfectly. And that's an enormous if," said Kirby Daley, senior strategist at Newedge Group in Hong Kong.

In Japan, the Nikkei 225 stock average gained 272.77, or 3.3 per cent, to 8,488.30, and Hong Kong's Hang Seng index was up 464.35 points, or 3.5 per cent, at 13,911.77. South Korea's Kospi gained 1.9 per cent to 1,221.70.

Elsewhere, Shanghai's index rose 0.6 per cent, Australia's stock measure added 0.8 per cent and Taiwan's benchmark was up 2.3 per cent. India's Sensex traded 1.3 per cent higher at 9,542.33.

Among the day's best performers were financials, which have recovered sharply in recent weeks. Mitsubishi UFJ Financial Group Inc., Japan's largest bank, rose 4.5 per cent, while top Australian investment bank Macquarie Group galloped ahead by five per cent.

Banking giant HSBC jumped 9.8 per cent in Hong Kong, catching up with an overnight surge in its London shares as trading in its rights to a new share offering got under way.

Cheered by news about the banks and housing sector, investors sent stocks surging, and the Dow rose 497.48, or 6.8 per cent, to 7,775.86, its highest finish since Feb. 13. The Standard & Poor's 500 index rose 54.38, or 7.1 per cent, to 822.92, crossing the psychological milepost of 800.

But Wall Street was poised to give up some its gains after U.S. futures fell. S&P futures were down 4.7 points, or 0.6 per cent, to 812.60.

Oil prices dipped in Asia, with benchmark crude for May delivery down 23 cents at $53.57. The contract rose $1.73 to settle at $53.80 overnight.[/SIZE]