Asian Markets Mixed After Australia's Big Rate Cut

Asian markets showed signs of life Tuesday as investors cheered a big interest rate cut by the Australian central bank aimed at alleviating the unfolding global credit crisis that has battered global markets.

A late rally on Wall Street that pared earlier huge losses also gave investors a bit of sorely needed confidence, analysts said.

Citing "heightened instability" in markets, the Reserve Bank of Australia slashed its key rate by 1 full percentage point to 6 percent. Analysts had expected a half-point cut. The move sent Sydney's S&P/ASX-200 index up 1.7 percent to 4,618.7 after opening down 3.7 percent.

Other markets seemed to react positively to the bold move: Main indices in South Korea, Singapore and Taiwan all edged higher, perhaps staunching a global market sell-off Monday.

Japan's benchmark Nikkei 225 index erased some of its early losses to closed down 3 percent at 10,155.90. Earlier, it had plunged over 5 percent to below 10,000 for the first time in almost five years.

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Unlike its Australian counterpart, the Bank of Japan announced it was keeping its interest rates unchanged at 0.5 percent, as expected. However, there is growing speculation that BOJ may soon coordinate with the U.S. Federal Reserve and the European Central bank in an emergency policy move. Some analysts say its unlikely Japan would reduce its key rate because it is already so low.

Earlier Tuesday, Bank of Japan injected another 1 trillion yen ($9.9 billion) into the money market in its 15th straight day of emergency operations to foster smoother lending among banks.

Investors in Japan said they were encouraged by a late day rally on Wall Street Monday as well as overall sentiment that stocks had fallen too far too fast, said Toshikazu Horiuchi, equity strategist at Cosmo Securities.

"There was a sense that the market was oversold," he said.

The Dow Jones industrial average, down more than 800 points at one point Monday, recovered in the final 90 minutes of the session to finish down 370 points, or 3.6 percent, to 9,955.50, its first close below 10,000 since 2004.