Tokyo (CBS\AP) -- Asian markets soared for a second day Tuesday, led by a stunning 13 percent jump in Tokyo, after Wall Street rallied from its worst week ever on optimism that government rescue efforts will heal the crippled global financial system.
Japan's benchmark Nikkei 225 index surged 1,127.11 points, or 13.62 percent, to 9,403.54 by the afternoon- a stunning reversal after plunging nearly 10 percent Friday. Tokyo financial markets were playing catch-up because they were closed Monday for a holiday.
In Australia, the S&P/ASX200 index traded 3.7 percent higher as the government announced a plan to inject 10.4 billion Australian dollars ($7.4 billion) to strengthen the country's economy.
Hong Kong's key index gained 4.4 percent, while South Korea's market jumped nearly 5 percent. The Philippine market surged more than 7 percent and Indonesia's market - shut half of last week due to dramatic declines - was up more than 6 percent.
Japanese bank Mitsubishi UFJ Financial Group Inc. added more than 14 percent after completing a $9 billion deal for a 21 percent stake in U.S. investment bank Morgan Stanley.
The Asian advance came after the Dow Jones industrial average gained more than 11 percent - its biggest one-day gain since 1933 - in a huge overnight rally as traders reacted with relief to efforts by the U.S. government to inject capital into banks and get lending flowing again.
Late Monday, U.S. government officials and industry executives said the Bush administration will use $250 billion of the $700 billion bailout program to buy into American banks. The government initially will buy stock of nine large banks, but the program is expected to be expanded to many others.
The $700 billion package, approved by Congress this month, gave Treasury Secretary Henry Paulson the authority to buy bank stock, which can be done in days - far more quickly than buying up the bank's toxic mortgage loans, which will take weeks, reported CBS News correspondent Anthony Mason.
The Bush administration's plan followed signals that European governments were putting up nearly $2 trillion to safeguard their own banks.
"The governments are ensuring that no matter what happens they're not going to allow another major institution to fail," said Nicole Sze, an investment analyst at asset manager Bank Julius Baer & Co. in Singapore. "What's happened in the last 48 hours is an extremely positive development. ... You're seeing a reversal of the panic selling, and we think a temporary bottom has been found."
(AP Photo/Shaun Curry/Pool)
Credit for the emergency bank share purchasing plans around the globe has gone largely to British Prime Minister Gordon Brown (seen at left), whose government moved first to invest tax-payer money in big-name private banks.
CBS News correspondent Mark Phillips reported that Brown went, just during last week, from being the man without a plan to the man whose plan everybody is now following.
"The fact that Europe may well adopt the Gordon Brown plan for semi-nationalization of banks and that Henry Paulson may do the same, certainly stabilized markets this morning," British market analyst and journalist David Buik said Monday.
No one has ever accused Gordon Brown of unnecessary charisma, said Phillips, but his dour Scottish, no nonsense manner - and a lot of money - has produced the first break in the cloud of doom that has enveloped London's financial center and others around the world.
For an investment of $63 billion, British taxpayers now have interests - in one case a majority interest - in three of the country's largest banks, reported Phillips.
In Europe on Monday, Germany's DAX ended up 518.14 points, or 11.4 percent, at 5,062.45, while France's CAC-40 finished 355.01 points, or 11.2 percent, higher at 3,531.50.
What's happened in the last 48 hours is an extremely positive development.
Nicole Sze, Bank Julius Baer & Co.
Britain's FTSE 100 gained 324.84 points, or 8.3 percent, to 4,256.90, despite some hefty falls in the banks that have accepted government help. The strong showing follows sharp falls in stock indexes worldwide last week, and as interbank interest rates remain abnormally high.
Despite Monday's sharp share price gains, investors remain skeptical that the stock markets are out of the woods. It's too early to tell if the banking measures outlined Monday will actually work or how the recent carnage in financial markets will play out in the global economy.
"I'm not convinced yet. It's a bit of a waiting game," said David Jones, chief markets strategist at IG Index.
The latest coordinated move emerged before European trading began, when top central banks - including the U.S. Federal Reserve and the European Central Bank - unveiled new measures to thaw frozen credit markets and bolster funding to banks. They joined the Bank of England and the Swiss National Bank in saying they would provide unlimited U.S. dollar funds to financial institutions. The Bank of Japan said it was considering similar measures.
The banks' action came after leaders of the 15 countries using the euro said Sunday they would guarantee new bank debt until the end of 2009, allow governments to help banks by buying preferred shares, and vowed to rescue important failing banks through emergency recapitalization.
The key is whether the flurry of activity can actually ease conditions in the credit markets. Despite the coordinated interest rate reductions announced last Wednesday, and massive liquidity boosts, the rates at which banks lend to each other continued to rise. That means banks were afraid to lend to each other, and raises the chance that they and other businesses won't get the credit they need to operate.
While those concerns still linger, investors were encouraged that governments appeared to be taking steps to tackle one of the core problems - helping to revive bank-to-bank lending, which has almost ground to halt because of fears about repayment due to enormous losses from souring mortgage-linked debt.
Photo: Traders react as the Philippine Stocks Exchange surges 154.9 points or 7.3 percent to close at 2,273.65 points, Oct. 14, 2008 in Manila's financial district of Makati. (AP Photo/Bullit Marquez)
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What's happened in the last 48 hours is an extremely positive development.
