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US plan sparks Asia shares rally US plan sparks Asia shares rally
(about 1 hour later)
Stocks in east Asia have risen sharply, with investors buoyed by Thursday's agreement in the US on a $150bn (£76bn) package to stimulate the US economy. Asian stocks have risen sharply, with investors cheered by a White House plan to spend $150bn (£76bn) to revive the flagging US economy.
In Hong Kong, shares were up by nearly 5% by mid-morning, while stocks rose about 2% in Australia and Japan. With millions of US consumers due to get tax rebates, the hope is that a US recession will be prevented and so demand for Asian goods will not slow.
Shares on the New York stock exchange rose on Thursday after Congress agreed the package, which is aimed at staving off a recession. The benchmark index in Hong Kong, the Hang Seng, jumped 5%, while Japan's Nikkei 225 gained 4%.
The rally follows a volatile week on world financial markets. The rally follows rises on Wall Street, with the Dow Jones climbing 0.9%.
The White House and the Democrats in Congress agreed the economic stimulus package, which will offer tax rebates to boost growth, on Thursday. The rebound followed a volatile week on world financial markets, which saw hefty losses on Monday and Tuesday, before a recovery began on Wednesday.
Japan's Nikkei 225 ended up 536 points, or 4%, at 13,629.2, while Hong Kong's Hang Seng was trading up 1,254 points, or 5.3% at 24,793.
Stock markets in South Korea, Taiwan, the Philippines and Australia also rose.
"The markets are reacting to news that Bush and Congress have agree to accelerate tax rebates for US consumers so they can go out and buy more exports from Asia," said Francis Lun, a general manager at Fulbright Securities.
Stimulus measures
On Thursday, the White House and the Democrats in Congress agreed a package of measures to boost economic growth in the US, where fears of a recession have risen.
This included a tax rebate to some 117 million US homes of up to $600 for individuals and up to $1,200 for married couples.
House of Representatives Speaker Nancy Pelosi said Congress would act on the deal "at the earliest date, so those rebate cheques will be in the mail".House of Representatives Speaker Nancy Pelosi said Congress would act on the deal "at the earliest date, so those rebate cheques will be in the mail".
Some 117 million US homes will receive a rebate of up to $600 for individuals and up to $1,200 for married couples.
Washington is moving fast to try to avoid the US falling into a recession.
I can't say that I'm totally pleased with the package, but I do know that it will help stimulate the economy Democrats' Nancy Pelosi
Couples with children will also get an extra $300 per child.Couples with children will also get an extra $300 per child.
The tax rebates for households should total $100bn, while businesses will benefit from up to $50bn of tax cuts.The tax rebates for households should total $100bn, while businesses will benefit from up to $50bn of tax cuts.
"Because the country needs this boost to the economy now, I urge the House and the Senate to enact this economic growth agreement into law as soon as possible," said President George W Bush."Because the country needs this boost to the economy now, I urge the House and the Senate to enact this economic growth agreement into law as soon as possible," said President George W Bush.
Property slump The agreement came two days after the Federal Reserve slashed US interest rates to 3.5% from 4.25%, its biggest cut in 25 years.
The agreement comes two days after the Federal Reserve slashed US interest rates to 3.5% from 4.25%, its biggest cut in 25 years.
Economists say the package needs to be put into action as soon as possible, before it is too late to help the economy.Economists say the package needs to be put into action as soon as possible, before it is too late to help the economy.
"I can't say that I'm totally pleased with the package, but I do know that it will help stimulate the economy," said the Democratic Party's Ms Pelosi.
"But if it does not, then there will be more to come."
House Republican leader John Boehner, Ms Pelosi and Treasury Secretary Henry Paulson met for more than five hours on Wednesday to forge the agreement.
The US has been hit by a slump in the property market and a credit crisis caused by banks investing in assets backed by sub-prime mortgages.
Some politicians are worried about the damage the plan will do to government finances.
It could potentially double last year's budget deficit of $163bn.
"I am concerned that in our rush to help, we talk ourselves into a quick, feel-good hit today that will leave us with a bigger budgetary hangover tomorrow," said Rep Paul Ryan of Wisconsin, the senior Republican on the House Budget Committee.