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Tokyo - Japan's key stock index shot up almost 10% on Thursday, lifted by a US rate cut - and hopes for a similiar move in Japan - and by a rally in Asian markets.
The benchmark Nikkei 225 stock index soared 817.86 points, finishing at 9 029.76 in its third consecutive day of gains. The broader Topix index jumped 8.32% to 899.37.
"Pessimism that has gripped the global stock market eased on the US rate cut, sparking buying in Tokyo and across Asia," Kazuhiro Takahashi, equity strategist at Daiwa Securities SMBC.
The US Federal Reserve on Wednesday slashed a key interest rate by half a percentage point to 1.00%, a level seen only once before in the last half-century as the world's largest economy teeters on the brink of a recession.
"While the US rate cut was expected in the market, investors cheered the Federal Reserve's resolve to tackle the credit crisis," Takahashi said.
The US rate cut triggered speculation that the Japanese central bank would follow suit and slash its already ultra-low interest rate at a meeting on Friday. Investors forecast the Bank of Japan would cut the rate by 0.25 percentage point on Friday in a bid to calm market jitters.
The Nikkei index was also supported by gains in exporters on the back of an easing yen. Exporters such as Sony and Toyota were heavily sold recently as the Japanese currency last week hit ¥91 to the dollar, the strongest since August 1995. On Thursday afternoon in Tokyo, the yen rebounded further, sending the dollar up to ¥98.75.
A strong yen hurts Japanese exporters by eroding their overseas earnings when converted back to yen.
Sony jumped 11.5% to ¥2 270. Shares of Japan's top automaker, Toyota, gained 11.4% to ¥3 900. Honda jumped 13% to ¥2 760.
Mitsubishi Motors added 8.2% to ¥132 after the company said it swung into the black during the April-September period for the first time in six years, helped by receding restructuring costs receded and a more profitable model mix.
Japan's top brokerage firm, Nomura Holdings, rose 11.6% to ¥961.
- AP