HONG KONG (MarketWatch) -- Most Asian markets sprang from sharp intraday losses to end higher Friday, with trader speculation that China may cut interest rates further and that the U.S. may announce stops auto industry over the weekend contributing to the bounce.
Financials such as Mizuho Financial Group and HSBC Holdings led the advance after a string of declines recently.
The gains came in the wake of a Wall Street Journal report that Citigroup was weighing the possibility of auctioning off pieces of the financial giant or even selling the company outright. See Citi story.
Linus Yip, strategist at First Shanghai Securities, said expectation of a rate cut by the Chinese central bank over the weekend helped lift China-related shares in Hong Kong, where the market declined during the previous four sessions, but not on the mainland, as the Shanghai market had come off its lows and was undergoing a consolidation.
Hong Kong's Hang Seng Index dropped as low as 11,814.81 during the session, before bouncing to end the day 2.9% up at 12,659.20.
China's Shanghai Composite, which slumped as much as 4.6% at one point on reports that the mainland's unemployment was likely to worsen in the wake of the global economic crisis, briefly ventured into positive territory in the afternoon, before slipping back into the red to end at 1,983.76, a decline of 0.7%.
"We're looking forward to four quarters of economic data declining at an increasing rate. We're also seeing more layoffs even in the region here ... that is the corporate equivalent of what consumers globally are doing -- look at what they've got and where they can save money," said Benjamin Collett, head of hedge-fund sales trading at Daiwa Securities SMBC in Hong Kong.
In an interview with the CNBC news channel separately, Marc Faber, editor and publisher of the Gloom, Boom and Doom report said weakening consumer demand in the U.S. would hurt exporters such as China the most.
"I'd be very careful about the Chinese economy. I think the Chinese economy isn't growing at 8% at the present time. Most likely it's already in contraction," he said.
In Tokyo, the Nikkei 225 rebounded as well, ending 2.7% higher at 7,910.79, while the broader Topix index climbed 2.6% to 802.69. The Bank of Japan as expected held interest rates at 0.3%. See Bank of Japan story.
South Korea's Kospi, which dropped during the previous eight sessions, jumped 5.8% to end at 802.69.
Taiwan's Taiex rose 2% to 4,171.10, while in afternoon trading, India's Sensex rose 3.5% to 8,748.97 and Singapore's Straits Times index gained 3% to 1,662.10.
Australia's S&P/ASX 200 rose 1.9% to 3,416.50 and New Zealand's NZX 50 index gave up 2.5% to 2,578.10.
Speculation of U.S. auto industry rescue
Traders said rumors that the U.S. may announce measures to rescue the auto industry also swirled the markets, contributing to the market's rebound in the afternoon.
"I think investors are watching [developments in] the U.S. car market. Any rescue package from the government should help the markets rebound," said Patrick Shum, strategist at Karl Thomson Securities.
Banks led the regionwide gains, with market heavyweight HSBC Holdings gaining 1.9% and China Construction Bank soaring 6.1%, reversing early declines.
In Tokyo, Mizuho Financial Group surged 13.9%, while Commonwealth Bank of Australia bounced 5.6% in Sydney, while KB Financial Group , which at one point slumped more than 13%, ended 1.8% up in Seoul.
Some energy-related shares broadly declined after crude-oil prices plunged overnight. Woodside Petroleum dropped 5.4% in Sydney and Cnooc lost 2.5% in Hong Kong, while PetroChina Co. slipped 0.5% in Shanghai.
Overnight on the New York Mercantile Exchange, December crude-oil prices dropped below $50 a barrel Thursday on the New York Mercantile Exchange, ending down $4 at $49.62. The contract expired overnight.
January crude-oil futures, which closed at $49.42 a barrel on the Nymex, rose 75 cents to $50.17 a barrel in electronic trading, after dropping as low as $48.25 earlier in the day.
In currency trading, the U.S. dollar bought 95.13 yen, compared with 95.01 yen late Thursday.
On Wall Street, the S&P 500 index slumped 6.7% to 752.44, a closing level it hasn't seen in more than 11 years. The Dow Jones Industrial Average gave up 5.6% to 7,552.29 and the Nasdaq Composite lost 5.1% to 1,316.12.
