Asian stocks rise with hopes that US Federal Reserve will loosen monetary policy

Asian stocks rise on hopes for Fed policy easing

BANGKOK — Asian stock markets rallied Wednesday, buoyed by growing expectations that the Federal Reserve will take steps to bolster the U.S. economy following the Bank of Japan’s surprise interest rate cut.

Oil prices hovered below $83 a barrel after a report showed U.S. crude supplies unexpectedly jumped last week, suggesting demand may be weaker than anticipated. The dollar fell against the yen and the euro.

Japan’s benchmark Nikkei 225 stock average gained 149.22 points, or 1.6 percent, to 9,667.98 after surging 1.5 percent the previous day.

South Korea’s Kospi rose 1 percent to 1,897.96. Australia’s S&P/ASX 200 was up 1.7 percent at 4,685.30 and Hong Kong’s Hang Seng jumped 1 percent to 22,884.65.

Markets in Malaysia, New Zealand, Singapore, Bombay and Taiwan also advanced. Financial markets in mainland China are closed through Oct. 7 for the National Day holidays.

Global equity markets surged Tuesday after Japan’s central bank cut its key interest rate target to a range of zero to 0.1 percent, and said it was looking to buy government bonds in an effort to boost the faltering Japanese economy.

“These steps taken by the different governments, and steps taken by the central banks of different governments are seen very positively by traders,” said Lee Kok Joo, head of research at Phillip Securities in Singapore.

Stocks got an additional boost when the Institute for Supply Management reported Tuesday that its index of business activity at U.S. service companies expanded again last month, and far faster than analysts were expecting. Services are the largest part of the U.S. economy.

Still, there was lingering fears that the Bank of Japan’s actions would not be enough to jump-start the country’s sputtering economy or put reins on the stubbornly strong yen.

“There was a knee-jerk reaction to the lowering of interest rates, but that did not really have an effect. The market is still not too confident in the Japanese government’s effort,” Lee said.

Meanwhile, traders were preparing to turn their attention to other indicators being released this week in the U.S., including the monthly jobs survey Friday. Earnings season also gets under way, with Dow component Alcoa Inc. reporting on Thursday.

On Wall Street, the Dow Jones industrial average jumped 193.45 points, or 1.8 percent, to 10,944.72 on Tuesday — the highest finish in nearly five months. The Dow also rallied after a trade group said that activity in U.S. services companies — the nation’s predominant job-generating sector — powered ahead in September.

Investors are also hoping for more action from the Federal Reserve to boost the U.S. economy. Fed Chairman Ben Bernanke said Monday the economy could be helped by another round of asset purchases by the central bank, and hopes are building that the Fed could announce new measures early next month.

Speculation that the Fed will resume buying U.S. Treasury bonds to push long-term interest rates down weighed on the dollar. The greenback fell to 83.17 against the yen from 83.25 yen in New York late Tuesday. The euro rose to $1.3838 from $1.3832.

Benchmark oil for November delivery was up 5 cents to $82.87 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained $1.35 to settle at $82.82 on Tuesday.