Sydney
14 October 2008
Asian stock markets have risen for a second consecutive day on optimism that government rescue efforts will heal the stricken global financial system. Japanese stocks soared by 14 percent. In Australia, investors were encouraged by Prime Minister Kevin Rudd's plan to spend billions of dollars to strengthen the economy. From Sydney, Phil Mercer reports.
Japan lead the gains in Asian markets Tuesday as the benchmark Nikkei 225 index surged by more than 1,100 points, or 14 percent - a stunning reversal after plunging nearly 10 percent Friday.
It was the Nikkei's biggest single-day gain in history.
The positive mood has been repeated across the region.
Stock prices in South Korea, the Philippines and Indonesia jumped by more than six percent, and key indexes in Australia and Hong Kong rallied more than three percent.
The recovery in Australian stocks, which went into freefall at the end of last week, followed a decision by the government to spend more than $7 billion to try to stave off recession.
The funds will come from the budget surplus, which has been amassed largely on the back of a mining boom that has seen vast quantities of Australian minerals exported to China and India.
Some economists say the stimulus package may not be enough to prevent Australia slipping into a recession after 17 years of uninterrupted growth.
In a nationwide address, Australian Prime Minister Kevin Rudd was optimistic about the future, but said that immediate action was needed.
"The global financial crisis has entered into a new, dangerous and damaging phase, one which goes to the real economy, growth and jobs," said Mr. Rudd. "And that is why the government has decided to act decisively and early on the question of this economic security strategy for the future; an economic security strategy to help underpin positive economic growth into the future and to provide practical support for households."
The recovery of Asian stock markets followed a surge in the Dow Jones Industrial Average, which gained more than 11 percent Monday - its biggest one-day gain since 1933.
Investors were reacting to efforts by the U.S. government to inject capital into banking system to stimulate lending, which has dried up in the global credit meltdown.