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Asian markets rally after US cut Global markets rally after US cut
(about 2 hours later)
Asian stock markets have risen after a dramatic interest rate cut by the US Federal Reserve helped calm anxiety. Global stock markets have risen after the US Federal Reserve's biggest interest rate cut for 25 years helped calm fears of a global economic slump.
Japan's Nikkei 225 index closed 2.0% higher as gains were limited by concern about the effects that the rate cut were having on currencies. The UK FTSE 100 index opened 42 points or 0.8%, higher at 5,782. France's Cac added 1.3% and Germany's Dax rose 1.2%.
Australia, South Korea and Hong Kong saw share prices rebound, following days of heavy losses. Japan's Nikkei 225 earlier closed up 2%, and Hong Kong's Hang Seng added 8%.
Australian shares finally managed to end their 12-day losing streak, closing up by 4.4%. Despite the recoveries, which were sparked by the Fed cutting US rates to 3.5% from 4.25%, analysts predict more share volatility in coming weeks.
'Stabilising'
In Hong Kong, the Hang Seng Index traded more than 5% higher, rebounding from Tuesday's drop of nearly 9%, while South Korean shares were up about 1%.
I expect the move will stabilize the global economy as a whole Fukushiro Nukaga Japanese Finance Minister Bear market may be looming
Global shares rebounded after the US central bank cut its main interest rate to 3.5% from 4.25% on Tuesday in an attempt to pull the world's biggest economy away from a recession.
Japanese Finance Minister Fukushiro Nukaga welcomed the move, saying he hoped it would have a positive effect on Japan's markets.
"I expect the move will stabilize US financial markets and the global economy as a whole," he said.
'Caution rules'
On Tuesday, the UK's FTSE 100 index closed 2.9% higher having fallen more than 4% in early trading.
France's Cac 40 closed 2.1% higher while Germany's Dax index closed 0.3% down having earlier been down by about 2.0%.
In the US, the Dow Jones closed 1.1% lower, but far bigger declines had been expected because US markets had avoided the hefty falls on Monday due to a public holiday.
One analyst said that while the rate cut might help to ease concerns in the short-term, stock markets were set to be volatile in coming weeks.
"Caution still rules the long-term picture," said Markus Steinbeis of Pioneer Investments."Caution still rules the long-term picture," said Markus Steinbeis of Pioneer Investments.
Recession fears
While global investors appear to have welcomed the Fed's dramatic move, some investors cautioned that it seemed like a panic decision.
We consider the Fed's rate cut still insufficient for the global financial markets to completely recover and help the Japanese stocks to fully rebound Shinichi Ichikawa, Credit Suisse
They also question whether it will be enough to avoid the US falling into a recession in the face of a sharp downturn in the American housing market, and signs of growing US unemployment and weakening consumer spending.
"The Fed's action provided a very positive surprise," said Tsuyoshi Segawa, strategist at Shinko Securities in Tokyo.
"But people are also starting to think that things may be so bad they needed to act."
Credit Suisse's chief strategist Shinichi Ichikawa added: "We consider the Fed's rate cut still insufficient for the global financial markets to completely recover and help the Japanese stocks to fully rebound."
In the US, the Dow Jones closed Tuesday 1.1% lower. Far bigger declines had been expected because US markets were closed for a public holiday on Monday, and had avoided the hefty falls that battered global shares.
The UK's FTSE 100 index closed Tuesday 2.9% higher, having fallen more than 4% in early trading.
France's Cac 40 closed 2.1% higher, while Germany's Dax index closed 0.3% lower, having earlier been down by about 2%.