25 Nov 2008

Asia-Pacific markets boosted by Citigroup bailout

8:57 pm on 25 November 2008

Shares in Asia and the Pacific were buoyed on Tuesday after the US government moved to bail out banking giant Citigroup.

The US government's $US20 billion rescue package boosted commodities and markets around the world reacted favourably.

Stocks on Wall Street's Dow Jones Industrial Average rose almost 5% on Monday following the Citigroup announcement and other markets also rebounded.

The Australian market posted its biggest one-day jump in 11 years, closing up more than 5% on Tuesday.

The benchmark S&P/ASX200 index soared 198.3 points, or 5.79%, to 3,623.4, while the broader All Ordinaries index jumped 186.6 points, or 5.51%, to 3,575.4.

The last time the indices' jumped more than 5.5% in one day was 29 October 1997.

In Japan, the bailout boosted the Nikkei index by 5.2% at the close. It gained 413.14 points to 8,323,93. Markets in Taiwan, Singapore and India rose over 2%.

New Zealand's benchmark index was 2.3% higher, up 59 points to 2634 on turnover of $82 million.

Top stocks were higher at the close of trade, with Telecom up 8 cents to $2.28, Contact Energy up 33c to $6.62, and Fletcher Building up 14c to $5.68.

Rough road ahead

Oil prices retreated below $US54 after surging more than 9% in the previous session, a rally that was big enough to send regional commodity-related stocks such as BHP Billiton sharply higher.

But plenty of near-term risks remained, including whether other global lenders are in need of rescue, the fate of US auto makers and indicators that continue to signal a rough road ahead for the global economy.

China's growth could well slow to its weakest pace in almost two decades next year, the World Bank said, the latest grim prognosis for a global economy buckling despite the concerted efforts of policymakers.

Australia's Qantas Airways, and Japan's Honda Motor were among the latest companies in the region to warn of a toughening outlook.