Asian stocks buoyed by lending ease

Governments continue efforts to bring down short-term borrowing costs.

    Asian stocks rebounded slightly with investors encouraged by a thaw in frozen credit markets [EPA]

    South Korea's benchmark KOSPI closed up 0.95 per cent after briefly touching a three-year low a day earlier.

    Markets in Singapore, Australia, Hong Kong, mainland China and Thailand also gained on Tuesday.

    Rescue plans

    The Korean government said on Tuesday it was planning to guarantee $100bn worth of foreign currency debts owed by 18 banks.

    IN DEPTH

    How the financial bubble burst

    Q&A: The US financial meltdown

    Reacting to the financial crisis

    Wall Street gripped by uncertainty

    Some of those banks will be posting their quarterly results in the next few weeks.

    South Korea's government has already announced a $130bn plan to stabilise the country's financial sector.

    Recent weeks have seen governments pump billions of dollars into troubled banks, while central banks have injected huge amounts of cash into money markets - where banks lend to each other - in an effort to ease the credit crunch.

    Such moves appeared finally to be bearing fruit as the cost of one bank borrowing from another has eased slightly.

    David de Garis, an economist with NAB Capital, said: "There are tentative signs that the worldwide measures taken by various governments to shore up the banking sector are starting to work."

    Recession fears

    But market watchers said that fears of a recession in the US and Europe, as well as worries about the outlook for corporate earnings, may limit the scope for a further rebound on battered global stock markets.

    China released weaker-than-expected economic growth figures on Monday highlighting the extent to which the credit crunch has spread around the world.

    Growth in the first nine months of the year was 9.9 per cent, compared to 11.9 per cent for the whole of 2007.

    Monday also saw governments around the world continue their efforts to keep credit flowing.

    The French government announced that it would inject $14bn into the country's six biggest banks and Sweden presented a plan worth about $200bn to help its financial sector if it comes under more pressure from the credit crisis.

    Meanwhile, oil prices climbed back above $75 a barrel on  expectations that Opec would cut output to boost prices, which have fallen nearly 50 per cent in the last three months.

    SOURCE: Agencies


    YOU MIGHT ALSO LIKE

    Interactive: How does your country vote at the UN?

    Interactive: How does your country vote at the UN?

    We visualised 1.2 million votes at the UN since 1946. What do you think are the biggest issues facing the world today?

    'We were forced out by the government soldiers'

    'We were forced out by the government soldiers'

    We dialled more than 35,000 random phone numbers to paint an accurate picture of displacement across South Sudan.

    Interactive: Plundering Cambodia's forests

    Interactive: Plundering Cambodia's forests

    Meet the man on a mission to take down Cambodia's timber tycoons and expose a rampant illegal cross-border trade.