TOKYO, December 15 – Asian stock prices rebounded sharply in early trade on Monday on growing hopes that the United States will step in to save its ailing Big Three automakers.
Asian and European markets had plummetted Friday after the US Senate shot down a multibillion-dollar package to rescue automakers on the brink of bankruptcy as the global economy slows down.
But Wall Street posted surprise gains to close another tumultuous week after the White House suggested it would help Detroit by tapping into a 700 billion-dollar bailout for the financial industry.
Tokyo\’s benchmark Nikkei index soared five percent by the early afternoon on Monday, making up much of its 5.56 percent fall on Friday.
Both Hong Kong and Sydney were up by more than three percent.
"Tokyo plunged Friday out of fears that New York would tumble after the auto bailout bill was scrapped," said Ryoji Nagaoka, an investment information official at SMBC Friend Securities.
"Since then, relief has spread after New York rallied," he said.
But Nagaoka said investors "do not expect the Big Three will get a bailout smoothly."
Monday\’s rise "does not make them feel optimistic," he said.
"If they had a bright outlook, the index would rise more than it fell on Friday. The rebound is still smaller than Friday\’s plunge."
US President George W. Bush said during a surprise trip to Afghanistan Monday that an agreement on how to remedy the carmakers\’ plight was not imminent.
"We are not quite ready," he told reporters travelling with him on Air Force One, but added: "This will not be a long process because of the urgency."
The Big Three US automakers — General Motors, Ford and Chrysler — have cautioned about the potential for millions of job losses if they collapse, which would send ripple effects through the already faltering economy.
Senator Bob Corker, a member of Bush\’s Republican Party, warned Sunday that GM and Chrysler could be only days away from bankruptcy.
In Tokyo, automakers\’ shares rebounded after severe falls on Friday.
Toyota Motor Corp. was up 7.43 percent at 2,965 yen. Honda Motor Co. rose 7.76 percent to 2,070 yen.
The Japanese market was higher despite the grim results of a business survey showing manufacturers\’ sentiment had suffered the steepest drop since the 1970s.
The Tankan survey revealed confidence had tumbled to minus 24 in December from minus three in the previous quarter — anything below zero means pessimists outnumber optimists.
Among other markets, Seoul was up 4.41 percent and Singapore rose 2.21 percent.
Shanghai, where shares have lost more than half their value this year, was up 1.52 percent after the government pledged over the weekend to take measures to stabilise the stock market.
However, there was more bad economic news as figures showed China\’s industrial output growth slowed in November from a year ago, more evidence that Asia\’s second largest economy is feeling the global financial crisis.
Bangkok was up by more than one percent in early trade despite nervousness as parliament convened to select a new prime minister to lead the country through its political turmoil.
Taipei was up by nearly three percent after China and Taiwan launched direct flights, a sign of easing tensions welcomed by the business community.
"This is a real benefit for the economy," helping to save time and costs for companies, Taiwan International Securities trader Cecelia Lu told Dow Jones Newswires.