Asian stocks soar on rate cut hopes

Asian stocks soared for a second straight day Wednesday after a powerful rally on Wall Street as hopes mounted for further interest rate cuts to shore up the global economy.

Japan's Nikkei stock index jumped more than seven per cent in early trade, regaining the key 8,000 points level, after the Dow Jones had soared almost 11 per cent in New York overnight.

Shares jumped almost eight per cent in Seoul and 4.5 per cent in Sydney. Singapore saw a gain of 3.8 per cent, as did Taipei.

Investors were cheered by the prospect of further interest rate cuts by world central banks to try to ward off a global recession.

The US Federal Reserve was expected to reduce its key lending rate later in the day, while speculation was growing that the Bank of Japan would lower its already super-low rates on Friday to shore up Asia's largest economy.

"It appears that expectations for imminent interest rate cuts by the major central banks and some signs that the credit freeze is thawing overwhelmed more bad news on economic growth," said NAB Capital analyst John Kyriakopoulos.

"Central banks around the world are now taking more decisive monetary policy action to cushion the slump in economic activity."

Some analysts, however, expressed surprise at the sharp upturn, saying that bargain hunting and a massive buying rush by "short sellers" who had bet on lower prices helped fuel the advance.

The yen fell sharply after the Nikkei business daily reported that the Bank of Japan (BoJ) "is leaning toward" reducing its key interest rate by 25 basis points to 0.25 per cent at a meeting on Friday.

It would be the first cut since March 2001 when the central bank introduced an unprecedented policy of almost free credit to try to beat deflation.