TOKYO, November 10 – Asian stocks surged in early deals Monday, lifted by a Wall Street rally, a Chinese economic stimulus plan and a pledge by major economies to do what it takes to fight the financial crisis.
Hopes were growing that world leaders would take further steps to ward off a deep global recession and calm months of market turmoil when they meet in Washington for an emergency summit at the weekend.
Investors took heart from a Chinese fiscal stimulus package totalling four trillion yuan (586 billion dollars) aimed at ensuring continued brisk economic growth in the Asian powerhouse in the face of flagging exports.
Chinese share prices soared 5.1 percent in early trade, while Tokyo and Hong Kong both jumped 5.5 percent.
"The package boosted markets due to the timing and the sheer magnitude of the aid," said Societe Generale chief forex strategist Kenichi Yumoto.
Sonray Capital Markets chief economist Clifford Bennett described Beijing\’s plan as "a great package" that should ensure Chinese economic growth stays above 7.5 percent over the next two years.
Together with a pledge by Brazil, Russia, India and China — the BRIC nations — to promote and expand trade and capital flows, "there could not have been a better start to the week," he wrote in a note from Sydney.
The finance ministers of the BRIC countries vowed Friday at a meeting in Brazil "to take all necessary steps to lessen the impact of the recent turmoil on economic activity, aiming to preserve medium and long-term growth."
The Group of 20 major wealthy and emerging nations meanwhile pledged Sunday "all necessary steps" to boost sagging market confidence and give a bigger voice to developing countries in global economic affairs.
The finance ministers and central bank governors of the G20 nations meeting in Sao Paulo said there was consensus for major reforms of a global international financial system ravaged by a credit crisis.
The meeting aimed to lay the groundwork for the November 15 summit on the financial turmoil hosted by US President George W. Bush.
The credit crisis has created a "moment of change" enabling world powers to rebuild the financial system, according to British Prime Minister Gordon Brown.
"If we learn from our experience of turning unity of purpose into unity of action, we can together seize this moment of change in our world to create a truly global society," Brown was due to say in a speech.
The stock market gains came despite fresh reminders of the worsening health of the global economy.
British Prime Minister Gordon Brown who has said the credit crisis has created a "moment of change"
Japan\’s core machinery orders plunged at the fastest pace in a decade in the three months to September as the economy teetered on the verge of recession, official data showed.
The orders, a leading indicator of corporate capital spending, tumbled 10.4 percent from the previous quarter as companies cut back on investment in new plants and equipment in response to the economic slump.
Fitch Ratings meanwhile downgraded its sovereign ratings outlook on South Korea to negative from stable due to the impact of the global financial crisis.
US and European stock markets had posted strong gains Friday after heavy losses the previous day as investors bet that a weaker-than-expected US jobs report would prompt more interest rate cuts.
Wall Street\’s Dow Jones index jumped 2.85 percent despite grim data showing the unemployment rate in October spiked to a 14-year high of 6.5 percent, hardening expectations of a deep recession in the world\’s biggest economy.