The New Zealand sharemarket and the dollar continued to rally on Tuesday following the announcement in the United States of a $US1 trillion plan to bail out American banks.
The US Treasury's scheme offers billions of dollars in US government incentives in equity and loan guarantees to entice investors to buy troubled assets and restore health to banks.
The benchmark NZX 50 index was 43 points higher, or 1.69%, to 2635, on turnover of $88 million at the close, taking its lead from Wall Street which had gained about 7% on Monday.
Currencies such as the New Zealand and the Australian dollars were boosted as carry trades - borrowing in low-yielding currencies and buying higher-yielding ones - showed signs of making a comeback.
The New Zealand dollar reached a 10-week high on Tuesday and was trading around US57 cents, while the Australian dollar closed higher for its 10th consecutive local session at US70.74c.
In Asia, stocks reached two-month highs higher-yielding currencies jumped against the yen as the US plan to relieve banks of toxic debt spurred investors to pick up riskier assets.
The gains in major Asian equity markets followed a 7% surge in Wall Street's S&P 500, which was also supported by a surprise rise in home sales that spurred hopes a recovery is taking hold in the battered housing market at the heart of the global credit crisis.
Financial shares extended their rally after investors cheered the US Treasury's plan to free banks of up to $US1 trillion in troubled mortgage securities and other loans, part of an array of measures designed to jump start lending and the US economy.
In Japan, share prices closed up 3.32% as investors cheered the US plan to purge ailing banks of toxic assets. The Nikkei rose 272.77 points to 8,488.30 points.
The MSCI index of Asia-Pacific shares outside Japan climbed 2%, taking gains to 28% from the five-year low hit last November.
But in Australia, the sharemarket closed only marginally higher, following gains by the big miners and energy stocks.
At the close, the benchmark S&P/ASX200 index was 29.7 points, or 0.84%, higher at 3580, while the broader All Ordinaries gained 34.2 points, or 0.98% to 3517.3.
Wall Street surges
On Wall Street, the S&P 500 and the Dow industrials posted their biggest one-day percentage gains since late October on Monday after the Obama administration detailed the plan get rid of banks' bad debts.
The Dow Jones industrial average jumped 497.48 points, or 6.84%, to close at 7,775.86.
The Standard & Poor's 500 Index surged 54.38 points, or 7.08%, to 822.92. The Nasdaq Composite Index added 98.50 points, or 6.76%, to 1,555.77.