HONG KONG (Reuters) - Asian financial shares rallied on Monday, pushing up stocks and denting bonds across the region, with Tokyo's Nikkei up more than 2 percent, after talk of a rescue plan for a U.S. bond insurer eased worries about the outlook of global credit markets.
But U.S. recession fears lingered, continuing to pressure the dollar against other major currencies, while geopolitical concerns in Iran and Turkey lifted oil prices towards $99 a barrel.
Some analysts said the fate of bond insurers, and the implications on global credit markets, could keep stock gains in Asia short-lived after suffering double digit losses this year.
"It's impossible to call an end to it," said Eric Betts, equities strategist at Nomura Australia. "First, it was subprime and then different investment banks and now it's insurers. It has to go all the way through the food chain probably."
Financial firms such as South Korea's Woori Financial Group (053000.KS: Quote, Profile, Research) and Japan's Millea Holdings (8766.T: Quote, Profile, Research) gained after news on Friday of a rescue plan for Ambac Financial (ABK.N: Quote, Profile, Research) sparked hopes the bond insurer will maintain its top credit ratings, averting sell-downs of the debt it has guaranteed.
Lenders including Citigroup (C.N: Quote, Profile, Research) and UBS (UBSN.VX: Quote, Profile, Research) may announce a rescue for Ambac by Monday or Tuesday, a person familiar with the matter told Reuters.
The MSCI's index of Asian stocks excluding Japan rose 1.2 percent as of 0150 GMT, with stocks in Korea and Australia up around 1 percent each. Taiwanese shares gained over 2 percent.
Japan's Nikkei .N225 rose more than 2 percent, with shares getting an additional boost on a British media report that China's sovereign wealth fund planned to buy as much as $10 billion in Japanese stocks and may also purchase a large stake in oil and gas developer Inpex Holdings (1605.T: Quote, Profile, Research). Continued...
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