Asian stock markets gain but caution remains

HONG KONG -- Asian stocks rebounded modestly Friday from the previous day's rout, with Tokyo's index gaining more than 2 percent, as optimism grew the U.S. would again bailout the banking industry and a weaker yen lifted exporters like Toyota Motor Corp.

Trading was cautious after a tumultuous week that saw markets fall sharply, with some investors picking up beaten down shares but still wary of more trouble ahead amid deteriorating company profits and a global slump.

Tech shares across Asia gained after heavyweight American chipmaker Intel Corp. forecast a better second-half in 2009 even as it reported a 90 percent plunge in fourth quarter profit. Crude oil prices, which sank to near five-year lows overnight, continued to languish near $35 a barrel.

Investors found a glimmer of hope after Wall Street regained its footing on signs the U.S. government would do whatever is necessary to prevent its economy from sinking deeper into recession. With speculation mounting that debt-laden banks would need even more rescue money, American lawmakers approved the second $350 billion from the government's financial bailout funds.

Bank of America was said to be near an agreement with the U.S. that would provide $15 billion to $20 billion in new government support to the banking giant.

Still, the markets were due for a bounce after the steep declines over the week, analysts said, and the overall outlook was still gloomy.

"The market was overdone, extremely oversold, we're having a technical rebounds of sorts. However, the economic fundamentals are still poor," said Alex Tang, head of research at Core Pacific-Yamaichi International in Hong Kong. "Investors are hoping the stimulus will work,but it will take time. A U.S. recovery isn't going to materialize for some time."

In Japan, the Nikkei 225 stock average added 165.39 points, or 2.1 percent, to 8,188.70 as automakers and other exporters gained. Toyota Motor Corp. jumped 4.6 percent and Honda Motor Co. vaulted 7.7 percent.

Hong Kong's Hang Seng edged higher by 29.61 points, or 0.2 percent, to 13,272.57 and in mainland China, the Shanghai Composite Index climbed 2.2 percent. Benchmarks in South Korea, Singapore, Australia and Taiwan also rose.

The markets found support from Wall Street, where staged a turnaround to close higher. The Dow rose 12.35, or 0.2 percent, to 8,212.49 after falling the past six days.

Broader stock indicators also advanced, with the Standard & Poor's 500 index up 1.12, or 0.1 percent, to 843.74 and the technology-heavy Nasdaq composite index gaining 22.20, or 1.49 percent, to 1,511.84.

Wall Street looked to build on those gains as U.S. market futures gained in early trade. Dow futures rose 48 points, or 0.6 percent, to 8,210 and S&P500 futures climbed 5.1 points, or 0.6 percent, to 844.40.

Oil prices were slightly lower, with crude light, sweet crude for February delivery down 10 cents at $35.30 a barrel. Overnight, the contract fell 5 percent, or $1.88, to settle at $35.40, swooning as low as $33.20 during the session.

The dollar strengthened to 90.30 yen, up from 89.92 yen, and the euro rose to $1.3233.