Asia shares rally on strong wall street cues

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Asia stocks hit 2-month high2008 - A year of losses at Wall StreetPound hits record low against euroAustralia shares up 1.1 pct; banks lead

Hong Kong, November 25: : Asian shares surged on Tuesday in line with global peers and so-called safe haven assets such as bonds were shunned after the US rescue of Citigroup bolstered badly needed confidence in the broader banking sector.

The yen recovered from sharp day-earlier falls to edge up against major currencies, but traders said the Japanese currency's recent gains from safe-haven bids were likely to pause in the near term as the willingness to take risks returns.

Oil prices steadied at around $54 a barrel after surging more than 9 per cent in the previous session, a rally that was big enough to send regional commodity-related stocks such as BHP Billiton sharply higher.

"Expectations for the new US administration were a major factor while the Citi bailout news also helped. Gestures shown by (President-elect Barack) Obama and his team this week were aggressive and gave assurance to investors," said Kim June-kie, a market analyst at SK Securities in Seoul.

"However, worries and uncertainties still exist. In the US, the auto industry is restructuring and late payments by credit card holders are mounting," he added.

The MSCI index of Asia-Pacific stocks excluding Japan rose 3.8 per cent as of 0150 GMT, heading towards a third consecutive daily gain.

Japan's Nikkei average jumped nearly 4 per cent, resuming trading after a public holiday on Monday.

The broader market rally comes after an initial tepid Asian reaction to a US plan, announced on Monday, to shoulder most losses on about $306 billion of Citigroup's risky assets and inject capital into the struggling lender.

But a subsequent Wall Street rally, which capped the best two-day run since the aftermath of the 1987 stock market crash, put these doubts to rest, sparking optimism the US government could step in to support other big banks,

The rally in global markets was also helped after Obama promised to jolt the faltering US economy with a stimulus package, raising the outlook for beleaguered exporters worldwide.

Shares in South Korea and Australia rallied about 4 per cent each, while markets in Taiwan and Singapore gained 2-3 per cent. Hong Kong was seen opening up 4.5 per cent, but Shanghai's main index rose a modest 1.3 per cent.

Gains in Asia were led in part by banking shares such as South Korea's KB Financial Group and Commonwealth Bank of Australia recovering from steep falls on Monday.

REDISCOVERING RISK