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Australia cuts rate by 1%, lifting stocks
(Agencies)
Updated: 2008-10-07 14:50 An astonishing one percent interest rate slash by the Australian central bank on Tuesday, its biggest reduction in about 20 years, spawned anticipation in Asian-Pacific markets that other countries, including China and India, might soon follow suit to rescue a slowing world economy.
Investors across the region took heart, erasing some of the earlier losses that dragged down shares from Sydney to Seoul to Shanghai.
The Bank of England's Monetary Policy Committee is widely expected to cut borrowing costs on Thursday and investors are pricing in similar moves by the US Federal Reserve and the European Central Bank pretty soon. Investor hopes that the Australian move could be a prelude to a unified worldwide response to the financial crisis, started from the United States, helped markets to steady in Asia. Equities rallied regionwide. Much of Asia fought back, seizing on the glimmer of hope from Australia. Australia’s benchmark S&P/ASX 200 index leapt 2.3 percent after starting the day in negative territory and dipping to a three-year low. South Korea’s KOSPI clawed its way back from its lowest close in 21 months on Monday to trade up 0.5 percent. In Shanghai, bank shares rebounded amid speculation that government investment fund the Central Huijin could step in, again, to resume buying shares on the market. The Shanghai Composite Index, which tumbled 5.23 percent on Monday, ended Tuesday down 15.9 points, or 0.73 percent, to close at 2,157.84 points on Tuesday. |