Japanese stocks roared back Friday as investors welcomed Wall Street's overnight rally and news of a possible U.S. government plan to rescue banks from risky mortgage debt, reported ap. The benchmark Nikkei 225 soared 431.56 points, or 3.8 percent, to 11,920.86, a sharp rebound from Thursday, when it slid 2.2 percent to its lowest closing level in more than three years. The broader Topix index advanced 4.7 percent to 1,149.12. The gains came after a furious late-session rally Thursday in U.S. markets, following a report that the federal government could create an entity to absorb bad debt from troubled banks. Earlier Friday, the Bank of Japan pumped another 3 trillion yen (US$28.6 billion) into short-term money markets. Its eighth injection this week brought the total to 11 trillion yen (US$105 billion) since the dramatic fall of Wall Street titans Lehman Brothers and Merrill Lynch sent shockwaves through global markets. The infusion came a day after the U.S. Federal Reserve authorized the expansion of swap lines, or reciprocal currency arrangements, with several central banks including the Bank of Japan. All told, the Fed increased lines of cash to central banks by $180 billion to $247 billion. The global effort to boost liquidity has helped ease the lending deadlock among banks, which this week faced an «extremely difficult» fundraising environment, said Kenichi Hirano, equity general manager at Tachibana Securities in Tokyo. As a result, Japanese markets responded strongly. «Looking ahead, market volatility should subside,» he said. «U.S. markets will probably post strong gains again today, but they too will likely move more calmly in the future.» Financial and insurance issues were up sharply after enduring a brutal week. Sumitomo Mitsui Financial Group, Inc. surged 13.2 percent to 659,000 yen, Mizuho Financial Group, Inc. added 12.6 percent to 447,000 yen, and top brokerage Nomura Holdings, Inc. closed up 9.6 percent at 1,305 yen. Major nonlife insurer Sompo Japan Insurance Inc. was up nearly 12 percent at 925 yen, and casualty insurer Tokio Marine Holdings, Inc. gained 14.3 percent to 3,670 yen. Major exporters also strengthened on a recovering dollar. A weaker dollar reduces the value of profits earned overseas when repatriated to Japan. Toyota Motor Corp. rose 6.1 percent to 4,720 yen, and Nissan Motor Co. jumped 6.5 percent to 755 yen. In currencies, the dollar was trading at 106.88 yen Friday afternoon in Asia, up from 105.77 yen late Thursday. The greenback also gained against the euro, which bought US$1.4249 from US$1.4287.
