Asian stock markets rose today amid hopes that the action by the US Federal Reserve in slashing interest rates could pave the way for similar cuts across the region.

The dollar dropped to an 11-week low after the Fed's cut to a range of between 0 per cent and 0.25 per cent as traders interpreted the move as weakening the US currency.

Stocks in Asia rose, supported by sectors such as property that are sensitive to interest rates, although car manufacturers were weak as hopes of an imminent US car industry bailout faded and Honda cut its profit forecast for the third time in five months.

There was growing speculation that the Bank of Japan would cut the overnight cash rate from its current low level of 0.3 per cent as early as Friday.

David Cohen, director of Asian economic forecasting with Action Economics in Singapore, said: “This opens the door for more rate cuts in Asia. Everyone is now looking at the Bank of Japan, which may feel compelled to cut rates for some symbolic gesture."

Prospects for lower borrowing costs helped to lift the MSCI index of stocks in the Asia-Pacific region outside Japan to the highest since November 11, up 2.3 per cent on the day and extending its gains this month to 10.2 per cent.

However, Japan’s Nikkei share average shed early gains and finished 0.5 per cent higher at 8,612.52 as the strength in the yen further hit companies dependent on exports.

Hong Kong’s Hang Seng index climbed 1.5 per cent to 15,365.1 boosted by property-related stocks on hopes for lower borrowing costs.

Explore Markets

• United States

• Europe

• Japan

• China

• Russia

• The Gulf

• India

• Africa

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive