Most Asian stock markets rose Wednesday after a stunning rally on Wall Street as investors awaited possible interest rate cuts from central banks in the U.S. and Japan. European markets opened mixed.
Japan's market was by far the best performer: the Nikkei 225 index jumped 589.98 points, or 7.7 percent, to 8,211.90 after the dollar rebounded against the yen overnight, easing pressure on exporters.
But elsewhere, the regional rally fizzled by the afternoon as traders cashed in profits amid fresh worries about company earnings.
Hong Kong's Hang Seng Index, up nearly 5 percent in early trading, trimmed its gain to just under 0.9 percent in volatile trade after a spectacular 14.4 percent rise the day before. Australia's S&P/ASX200 climbed 1.3 percent.
South Korea's index pared its morning gains and dropped 3 percent as bank stocks pulled back on fears they may cut dividends after the government guaranteed their foreign currency loans.
The region's broader move higher came after a massive overnight advance on Wall Street, where the Dow Jones industrial average soared nearly 11 percent to 9,065.12 following rises in Asian and European markets earlier in the day.
The U.S. Federal Reserve is expected to cut its target fed funds rate by half a point to 1 percent on Wednesday amid signs the world's largest economy is facing recession. Markets also were holding out hope the Bank of Japan would trim its interest rate — already at a low 0.5 percent — when it meets Friday after The Nikkei business newspaper reported that such a move was being considered.
"The optimism is fueled by the prospect of rate cuts," said Singapore-based investment analyst Nicole Sze of Bank Julius Baer & Co., which manages about US$300 billion in assets. "Wall Street's rally brought some extra confidence to the market, reminding investors that selling might have been overdone and this might be a good time to pick some values."
"Having said that, this doesn't necessarily signify the absolute bottom and that things will be rosy from here," he said.
As trade opened in Europe, Britain's FTSE 100 index advanced about 5 percent and France's CAC-40 was up more than 6 percent. Germany's DAX, which surged more than 10 percent in Tuesday trade, fell back nearly 2 percent. Russia's RTS index was higher.
Wall Street futures were lower, signaling a weaker opening for the major U.S. indices in Wednesday trade. Dow and S&P futures were both down about 2 percent.
A weaker yen also prompted investors in Tokyo to buy exporters like Toyota Motor Corp., which shot up 10.4 percent. Honda Motor Co. jumped 18 percent even though on Tuesday it reported a 41 percent drop in quarterly profit and lowered its forecast for the full year.
The yen has softened since jumping to about 91 to the dollar Friday. On Wednesday, the dollar was trading at about 97 yen after surging above 98 yen Tuesday, but up sharply from 94 yen late Monday.
Japanese financials also rose, with megabank Mitsubishi UFJ Financial Group Inc. up 6.4 percent.
Stronger commodity prices helped shares of Australia's BHP Billiton Ltd, the world's largest mining company, which improved 3.7 percent. CNOOC Ltd., a unit of China's biggest offshore oil and gas producer, soared 10.8 percent in Hong Kong after posting a 69 percent rise in third-quarter revenues, thanks the surge in global crude prices.
Oil prices rose, led largely by the rebound in global markets. Light, sweet crude for December delivery advanced $2.10 to $64.83 a barrel in Asian trade on the New York Mercantile Exchange. The contract slid 49 cents overnight to settle at $62.73, the lowest closing price since May 15, 2007.