Asian stocks rebounded Friday from the previous day's rout, with Tokyo's index gaining nearly 3%, as the U.S. bailed out Bank of America again and a weaker yen lifted exporters like Toyota Motor Corp.
After a tumultuous week that saw markets fall sharply, early trade was cautious but picked up later in the day as investors snapped up beaten down shares.
While still wary of more trouble ahead amid the global downturn, investors were cheered by signs the U.S. government would do whatever is necessary to prevent its economy from sinking deeper into recession.
"The market was overdone, extremely oversold, we're having a technical rebounds of sorts. However, the economic fundamentals are still poor," said Alex Tang, head of research at Core Pacific-Yamaichi International in Hong Kong. "Investors are hoping the stimulus will work, but it will take time. A U.S. recovery isn't going to materialize for some time."
In Japan, the Nikkei 225 stock average added 206.84 points, or 2.6%, to 8,230.15 as automakers and other exporters gained. Toyota, which said Thursday it was making further production cuts in North America, jumped 6%, and Honda Motor Co. vaulted 8%. Electronics maker Nikon rose 6.7%.
Hong Kong's Hang Seng edged higher 12.55 points, or 0.1%, to 13,255.51 and in mainland China, the Shanghai Composite Index climbed 1.8%. Benchmarks in South Korea, Singapore, Australia, Taiwan and India also advanced.
Early Friday in the U.S, Bank of America and the Treasury Department reached an agreement for an additional $20 billion in fresh capital from the federal government's emergency rescue fund, plus guarantees against losses on up to $118 billion in troubled assets. The bank was to use the aid to help it absorb losses from its acquisition of faltering investment bank Merrill Lynch.
The deal came just hours after American lawmakers authorized a second $350 billion from the government's bailout fund amid mounting speculation that debt-laden banks would need even more rescue money. Meanwhile, allies of President-elect Barack Obama unveiled an $825 billion recovery bill — two-thirds spending and one-third tax cuts — to help jump-start the world's largest economy.
In Hong Kong, Chinese banks received a boost from news the country's sovereign wealth fund has been buying shares in the companies. Leading lender Industrial & Commercial Bank of China Ltd, or ICBC, rose 3.6%, while Bank of China added 4.6%.
Among Friday's top gainers were Asian tech stocks after heavyweight American chipmaker Intel Corp. suggested margins might improve in the second half this year, even as it reported a 90% plunge in fourth quarter profit.
South Korea's Hynix Semiconductor, the world's second-largest manufacturer of computer memory chips, gained 6.2%, and chipmaker Elpida Memry surged 13.6% in Japan.
The markets found support from Wall Street, where markets staged a turnaround to close higher. The Dow rose 12.35, or 0.2%, to 8,212.49 after falling the past six days.
Broader stock indicators also advanced, with the Standard & Poor's 500 index up 1.12, or 0.1%, to 843.74 and the technology-heavy Nasdaq composite index gaining 22.20, or 1.49%, to 1,511.84.
Wall Street looked to build on those gains as U.S. market futures advanced. Dow futures rose 86 points, or 1.1%, to 8,248 and S&P500 futures climbed 9.5 points, or 1.1%, to 848.80.
Oil prices were slightly lower, with crude light, sweet crude for February delivery down 9 cents at $35.31 a barrel. Overnight, the contract fell 5%, or $1.88, to settle at $35.40, swooning as low as $33.20 during the session to a near five-year low.
The dollar strengthened to 90.28 yen, up from 89.92 yen, and the euro rose to $1.3228 from $1.3155.