Tokyo finished up 1.3 per cent, Hong Kong rose 0.6 per cent, Singapore gained 2.9 per cent, Jakarta advanced 3.8 per cent, Manila closed 2.3 per cent higher and Bangkok edged up 0.3 per cent.

Sydney, Kuala Lumpur, Sydney and Taipei ended lower.

Citing `unusual strains' in financial markets, the US Federal Reserve's open market committee lowered its benchmark federal funds rate -- which affects overnight interbank loans -- a quarter of a point to 4.75 per cent, the third such move in the last month and a half. The discount rate, which the Federal Reserve charges member banks, was also cut a quarter of a point to 4.50 per cent. Most regional markets had been primed for the easing, dealers said, explaining the absence of a bigger reaction.

Japanese stocks rallied 1.3 per cent as pension funds actively chased Futures, prompting buying support in the cash market, brokers said. Brokers said the US rate cut had a limited impact on the Tokyo stock market. But a Marusan Securities broker noted `negative factors such as uncertainties about the US market outlook are beginning to disappear.'

A Taiheiyo Securities broker said public funds bought futures `with the aim of Boosting share prices and to change the present bearish sentiment' which followed Japan's launch of a massive $190-billion economic stimulus package on Monday.

The Nikkei average of 225 leading issues rose 186.23 points to finish at 14,599.23, reversing a 0.1-per cent 15.27-point drop in the previous session. The Topix index of all issues on the first section of the Tokyo Stock Exchange was up 5.77 points at 1,113.42.

Hong Kong: Hong Kong share prices rose 0.6 per cent on hope of a local interest rate cut following the US Federal Reserve's decision to trim rates by 25 basis points, dealers said. The key Hang Seng index gained 64.73 points to close at 10,213.42. Dealers said the US rate cut boosted investor hopes that local interest rate would be lowered when the Hong Kong Association of Banks (HKAB) meets on Friday.

Tang said the HKAB was expected to cut the Prime lending rate by 25 basis points on Friday, with a further cut of 25 points expected before the end of December. Paul Shulte, ING Baring strategist, said the rate cut had already been in the market, hence the subdued reaction.

Singapore: Singapore share prices closed 2.9 per cent higher, with cheer over the US interest rate-cut matched by a surprise half-point cut in the Prime rate of Singapore's biggest local bank. Dealers said property stocks, which benefit from lower interest rates, were the most actively traded shares. The Development Bank of Singapore Ltd. (DBS) announced a cut of half a point to 6.0 per cent in its prime lending rate. Other local banks are expected to follow.

The Straits Times Index rose 35.94 points to 1,271.70, while the broader All-Singapore index rose 7.84 points to 354.37.

Kuala Lumpur: Malaysian share prices closed 1.2 per cent lower as investors squared up their positions at the end of the trading settlement period. `Investors chose to take profits rather than hold on to stocks bought during last week's strong run-up as the local economic and political outlook remains volatile,'' a chief dealer with a local brokerage said.

``But we expect the market to bounce back pretty soon when local institutions start to window-dress,'' he added. The Kuala Lumpur stock exchange's composite index fell 5.78 points to finish at 458.34, while the lesser second board index lost 1.49 points at 120.95.

Bangkok: Thai shares made marginal gains, climbing only 0.3 per cent in light trade, despite boosted sentiment from US interest rate cuts, analysts said. Analysts said the index failed to breach resistance at 350 points as investors turned cautious and activity was muted by new rules limiting net settlement to 20 per cent of daily turnover.

``I believe internal factors were active in the market, especially with investors cautious over the regulator's policy on net settlement,'' Bookclub Finance and Securities analyst Thanadej Mahaphokai said. Thanadej said the US rate cut was not enough to buoy the market. The Stock Exchange of Thailand (SET) composite index rose 1.05 points to close at 345.13 points, while the select SET 50 edged up 0.1 points to 25.19 points.

Jakarta: Indonesian share prices closed 3.8 per cent higher on the back of the US interest rate cuts, which gave the rupiah a strong boost, dealers said. A dealer with a local brokerage said the market essentially picked up on the rate cut and firmer rupiah, with those companies holding large dollar debts particular ly in focus -- including car maker Astra International, diversified Gajah Tunggal and instant noodle manufacturer Indofood.

The dealer said the extent of the upturn was surprising, with investors clearly opting to concentrate on the new positive factors rather than the longstanding negatives in the market undermined by political jitters. As a result, the market may move higher still if interest rates ease further, he added.

Manila: Philippine share prices rose 2.3 per cent following the US interest-rate cut, analysts said. Jasmine Juanico of Anscor-Hagedorn Securities Inc. said `evidently, this is due to confirmation of the Fed rate cut,' adding that `whatever level of cut that the Fed decides upon will be positive for the market.' `It could have a trickle down effect on the troubled economies like the Philippines,' she said. The Philippine Stock Exchange composite index rose 41.54 points to close at 1,820.77 points.

Seoul: South Korean share prices ended 0.2 per cent weaker amid institutional profit-taking, after investors shrugged off an overnight US interest rate cut, dealers said. Dealers said investors reacted in muted fashion to the US interest rate cut as it was not expected to bring near-term rate cuts in local financial products. ``The rate slash must provide a momentum for the mid-and long-term view but for a while, the market is likely to face more profit-taking as it is seen reaching the short-term peak,'' LG Securities dealer Yoon Sam-wui said. The Korea Stock Exchange composite index closed down 0.69 points at 423.74, off a low of 420.64 and a high of 428.33.