Equities up as US and Asian markets rebound on Fed Discount Rate Cut, Financials Rebound

Asian stocks continued their rally into the afternoon session Monday, in line with a rebound in global markets after the U.S. Federal Reserve slashed a key U.S. bank lending rate, helping soothe jitters about a global credit credit.

In a surprise move that sparked a rebound on Wall Street last Friday, the U.S. central bank cut its discount rate by a half-percentage point to 5.75%. It left its benchmark federal funds rate steady at 5.25%. The Fed also said "downside risks to growth have increased appreciably,"dropping its views about inflation being a major concern and signaling a willingness to take more dramatic action to cushion the economy from tightening credit.

Still markets will like remain volatile in the next few weeks as uncertainty over the credit environment continues and U.S. growth weakens.

Financial stocks, hardest hit in the selloff, were back in favor. Australia's top investment bank Macquarie Bank climbed over 7%, Singapore's DBS Group gained over 6%, Japan's top lender Mitsubishi UFJ added 5.6%, while South Korea's top lender Kookmin Bank rose as much as 4%.

Tokyo's Nikkei 15897.76 624.08 +4.09% was up 3.7%, rebounding from its biggest one-week fall since the country's economic bubble burst in 1990, as investors snapped up shares following a rally on Wall Street and a fall in the yen. Digital camera maker Canon, automaker Toyota Motor and other blue-chip exporters were among the biggest gainers after the dollar recovered to about 114.3 against the yen from a 14-month low of 111.6 yen Friday.

South Korea's KOSPI surged over 5%, heading for its biggest gain in over three years, as fears about the impact of tighter credit on the global economy eased. Financials such as Daewoo Securities climbed, while exporters such as LG.Philips LCD also gained.

Australia's S&P/ASX 200 Index climbed 4% as the U.S. Federal Reserve's move to cut its discount rate helped soothe worries about a global credit squeeze, boosting shares in financial firms and top miner BHP Billiton. This is the index's its biggest one-day percentage jump since Oct. 29, 1997. QBE Insurance was up over 8% after it posted a large jump in first-half earnings, beating forecasts.

Singapore's Straits Times Index was 4.78% higher, in line with rallies in Asian markets. Banks were leading the advance with DBS Group, United Overseas Bank, andOversea-Chinese Banking Corp making gains.

China's Shanghai Composite Index surged more than 4%. Large-caps led the charge, with Industrial & Commercial Bank of China leading the advancers.

Hong Kong's Hang Seng Index jumped 3.8%, with the index breaching the key 21,000 level.

Source: CNBC