BANGKOK ? Asian stocks surged Tuesday as a pledge by European leaders to protect the region's banks from a debt crisis and Beijing's move to buy the shares of major Chinese lenders boosted confidence.
Oil prices hovered above $85 a barrel while the dollar strengthened against the euro and the yen.
Hong Kong's Hang Seng shot up 3.3 percent to 18,287.94. Japan's Nikkei was 2 percent higher at 8,780.25. South Korea's Kospi rose 1.6 percent to 1,794.62, and Australia's S&P/ASX 200 added 0.4 percent to 4,219.10.
China's Shanghai Composite Index rose 0.7 percent to 2,361.58 a day after a government investment fund announced it had bought shares in major banks, helping to bolster the country's sagging stock market.
Benchmarks in Taiwan, Singapore, Indonesia and Thailand were all higher by 2 percent or more.
China's four biggest state banks soared after Central Huijin Investment Ltd., an arm of the sovereign wealth fund China Investment Corp., said late Monday that it bought shares in the Industrial & Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank and that it would continue its market-support operations. It didn't say how many shares it had purchased.
The banks' Hong Kong-listed shares showed significant gains. ICBC climbed 7.9 percent, Agricultural Bank shot up 15.1 percent, Bank of China gained 8.9 percent and China Construction Bank added 7 percent.
Stock markets worldwide were also rejuvenated by signs that Europe is preparing serious steps to provide banks with the capital cushions necessary to withstand a possible debt default by Greece. Investors have been worried that European leaders weren't moving quickly enough.
German Chancellor Angela Merkel and French President Nicolas Sarkozy said Sunday that they would finalize a comprehensive response to the debt crisis by the end of the month.
But no details of the plan were released, and analysts cautioned against being too hopeful that a simple solution free of pain to financial institutions, investors or governments was imminent.
"Ultimately, we have to see something concrete from the European Union before we are more comfortable," said Derek Cheung, chief investment officer at Neutron INV Partners Ltd. in Hong Kong. Current market gains are simply "short-term excitement."
A default could cause the value of Greek bonds held by European banks to plunge, hurting their balance sheets. U.S. banks would also be affected if Greece goes through a messy default, since they own Greek bonds and also have close ties to European banks.
In Tokyo, a pause in the yen's appreciation against the euro helped export shares, Kyodo news agency reported, citing stock traders. Honda Motor Corp. jumped 6 percent while electronics giants Sony Corp. and Sharp Corp. each rose more than 5 percent.
Among the most active shares on South Korea's Kopsi were Dongyang Steel Pipe Co., up 6.7 percent; and Samyang Optics, up 7 percent. Steel giant POSCO rose 4.7 percent.
The gains in Asia followed a strong rally on Wall Street on Monday.
The Dow Jones industrial average soared 330 points, or 3 percent, its biggest one-day gain since Aug. 11. The Dow closed at 11,433.18 ? the highest since Sept. 16. The Standard & Poor's 500 index rose 3.4 percent to 1,194.89, while the Nasdaq composite index rose 3.4 percent to 2,566.05.
Benchmark crude for November delivery was down 13 cents at $85.28 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $2.43 to settle at $85.41 in New York on Monday.
Brent crude was down 20 cents at $106.45 a barrel on the ICE Futures Exchange in London.
In currencies, the euro fell to $1.3629 from $1.3650 late Monday in New York. The dollar rose slightly to 76.66 from 76.69 yen.
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