HONG KONG - ASIAN stocks rebounded on Thursday, boosted by the biggest surge in US bank shares in 16 years and a decline in oil prices, providing some relief from fears about the global credit crisis spiralling out of control.

Wells Fargo, the fifth-biggest US bank, boosted the entire sector by posting quarterly results well above expectations and raising its dividend by 10 per cent.

Shares of high-profile Asian exporters such as consumer electronics giant Samsung Electronics gained as lower energy prices comforted investors about the outlook for demand, while shares of Japan's largest bank, Mitsubishi UFJ Financial Group, rose 5 per cent on hopes for the financial sector.

'With the subprime problems still out there, it does not mean a trend change, but we are seeing a short-term rebound led by recently battered banks and exporters,' said Mr Norio Shimura, deputy head of the equity department at Chuo Securities in Tokyo.

Japan's Nikkei share average rose 1.1 per cent, already set for the biggests daily rise in a month.

Outside of Japan, shares in the Asia-Pacific region were up 1.5 per cent on the day after plumbing the lowest since March 2007 on Wednesday.

Hong Kong's Hang Seng index jumped 2.5 per cent, led by gains in global bank HSBC .

South Korea's Kospi climbed 2.35 per cent after touching a 15 month low the previous session.

Stock markets globally remain entrenched in a bear market, with the overall decline in the MSCI all-countries world index at slightly more than 20 per cent from an all-time high reached in November.

Oil eases but inflation remains
Credit Suisse equity strategists have increased their overweight in US stocks to 10 per cent of their model portfolio based on the ability of US companies to cut costs more quickly than in Europe or Japan. They have also increased their holdings of UK and Japanese stocks, having cut their exposure to emerging markets and continental Europe, though the allocations are tactical.

'Ironically, we find reasons to sell nearly all the regions,' they said in a research note.

Crude prices were stable around US$135 a barrel, having fallen 6.9 per cent so far this week on the view that demand from the United States, the top consumer nation, would continue to decline as a result of high energy costs.

But oil is still up 41 per cent so far this year, confounding policymakers trying to bolster growth and shield their economies from turmoil in financial markets.

High energy prices were the biggest factor in speeding up US consumer inflation to the quickest since September 2005, while China confirmed inflation pressures remained high despite its economy slowing in the second quarter and this week's sharp fall in oil prices helped to push up the US dollar overnight, though some analysts believe the longer-term direction of the currency is still lower.

Though the financial sector was jolted higher on signs of resilience at some banks, fears that the US government may have to take over the struggling top mortgage finance companies, Fannie Mae and Freddie Mac , continue to cast a pall of uncertainty over markets.

'Looking beyond the rally in the dollar last night, we think the developments concerning Freddie Mac and Fannie Mae warrant the dollar trading in a lower trading range for now,' said Mr Ashley Davies, currency strategist with UBS in Singapore.

The euro was at US$1.5835 , nearly unchanged on the day and about two cents below an all-time high hit on Tuesday. Against the yen, the dollar was at 105.02 yen.

Japanese government bond yields, which move in the opposite direction of prices, ticked higher after an overnight rise in US Treasury yields and a rally in equity markets prompted investors to shift money to stocks from bonds.

The benchmark 10-year Japanese government bond yield rose four basis points to 1.605 per cent, though it is down more than 25 basis points since mid June.

KUALA LUMPUR
The Kuala Lumpur Composite Index (KLCI) fell 4.25 points, or 0.38 per cent, to 1,115.17, at midday.

HONG KONG
Hong Kong shares opened up 2.7 per cent on Thursday, tracking Wall Street gains on falling oil prices, dealers said.

The benchmark Hang Seng Index opened 569.92 points higher at 21,793.42.

All but one of the 43 blue chips were up.

Hong Kong Exchanges and Clearing surged 4.9 per cent because of the overall market rally. Sinopec was up 4.8 per cent on easing crude prices. Hong Kong Electric was down 0.2 per cent, as investors tend to sell utility counters amid market rallies.

SHANGHAI
Chinese share prices rose Thursday morning as falling crude oil prices boosted market sentiment, dealers said.

The benchmark Shanghai Composite Index, which covers A and B shares, rose 46.35 points, or 1.71 per cent, to 2,752.22 at 9.55am Singapore time.

The Shanghai A-share index was up 48.68 points, or 1.72 per cent, to 2,886.78, while the Shenzhen A-share index gained 11.37 points, or 1.34 per cent, to 858.55 points.

TOKYO
Japan's Nikkei average rose 1.1 per cent on Thursday, led by exporters such as Canon on a rebound in the dollar versus the yen , while financial stocks jumped after surprisingly strong results from a US bank.

Major brokerages, including No. 1 Nomura Holdings , gained more than 5 per cent.

The benchmark Nikkei ended the morning up 141.59 points at 12,902.39. The broader Topix gained 1.5 per cent to 1,268.00.

SINGAPORE

Singapore stocks rose with the benchmark Straits Times Index (STI) up 44.33 points, or 1.56 per cent, to 2,879.65, at midday.

Some 611.1 million shares exchanged hands. Gainers beat losers 308 to 153.

-- REUTERS, AFP, ST