Asian Stocks Rebound After Rate Cut; Banks, Miners Lead Gains

By Chen Shiyin and Emma O‘Brien


Jan. 23 (Bloomberg) -- Asian stocks rebounded after the U.S. Federal Reserve‘s surprise interest-rate cut boosted banks and higher metals prices lifted miners.
Commonwealth Bank of Australia jumped the most in a decade and BHP Billiton Ltd., the world‘s largest mining company, soared the most in 20 years. Toyota Motor Corp. and LG.Philips LCD Co. led gains among companies that rely on U.S. sales. Asia‘s benchmark yesterday completed its worst two-day drop in almost 18 years on concern the global economy is slowing.
The Fed rate cut ``will certainly help; the economy in the U.S. is much stronger than a lot of people are saying,‘‘ Donald Gimbel, who manages almost $2 billion at Carret & Co. in New York, said. ``A lot of the sell-off has been due to an unwarranted fear in Asia that a slowdown in the U.S. will immediately jump across the Pacific.‘‘
The MSCI Asia Pacific Index added 2.6 percent to 135.47 as of 10:30 a.m. in Tokyo, headed for its biggest gain since Nov. 29. The regional benchmark tumbled 10 percent in the previous two sessions.
Japan‘s Nikkei 225 Stock Average surged 3.5 percent to 13,062.41. Australia‘s S&P/ASX 200 Index jumped 5.1 percent, poised for its largest advance since October 1997. Indexes gained in all other markets open for trading.
The Fed cut the target overnight lending rate by three quarters of a percentage point to 3.5 percent, its first emergency reduction since 2001.
`Comforting‘ Cut
Commonwealth Bank, Australia‘s second-biggest bank, rose 5.5 percent to A$51.55, set for its largest gain since October 1997. Mitsubishi UFJ Financial Group Inc., Japan‘s largest publicly traded bank, climbed 5.3 percent to 908 yen, and Sumitomo Mitsui Financial Group Inc., the No. 2, added 6.4 percent to 745,000 yen, advancing for the first time in nine days.
The Fed cited ``a weakening of the economic outlook and increasing downside risks to growth,‘‘ adding that it will act in a ``timely manner‘‘ to address the risks.
Policy makers weren‘t scheduled to gather on rates until Jan. 29-30. The worst U.S. housing slump in at least 16 years has led to mortgage losses at banks, crimping the amount of credit available worldwide, and igniting concerns consumer demand in the world‘s largest economy will wane.
The rate cut is ``comforting because it indicates that the Fed is starting to pay attention to the maintenance of market stability,‘‘ said Angus Gluskie, who helps manage the equivalent of $500 million at White Funds Management in Sydney.
Metals Gain
BHP jumped 9.4 percent to A$33.90, snapping a five-day, 20 percent loss and heading for its biggest advance since December 1987. The company said today second-quarter iron-ore output rose 9 percent to a record on demand from China.
A measure of six metals traded on the London Metal Exchange, including copper and nickel, gained 1.7 percent. Copper rose 2.2 percent and zinc jumped 3.6 percent. Gold also recently rose 1 percent to $890.30 an ounce in after-hours trading in New York.
Rio Tinto Group, the world‘s third-largest mining company, surged 5.8 percent to A$106.90, after yesterday tumbling by the most since December 1987. Nippon Mining Holdings Inc., Japan‘s biggest copper producer, rose 6 percent to 587 yen.
Toyota, Japan‘s largest automaker, surged 5.7 percent to 5,160 yen and Honda Motor Corp., the second-largest, jumped 4.3 percent to 3,040 yen. Japan‘s three largest automakers rely on the U.S., the world‘s biggest auto market, for more than half of their earnings.
LG.Philips, the world‘s second-largest maker of liquid- crystal displays, climbed 1.7 percent to 545,000 won. Nintendo Co., maker of the Wii game console, added 5.5 percent to 53,800 yen. James Hardie Industries NV, the biggest supplier of home siding in the U.S., rose 6.6 percent to A$5.79.