Support for yen
boosts markets

The move is seen helping
Asia recover

Star-Bulletin news services

NEW YORK -- Stocks surged today in world markets on new efforts to prop up Japan's ailing economy.

The Dow Jones industrial average, which rose as many as 225 points, ended the day up 164.17 points, or 1.89 percent, at 8,829.46.

Today's gain nearly wiped out the remainder of Monday's 207-point slide. The blue-chip barometer gained 37 points yesterday.

Stocks in the United States and throughout the world fell sharply Monday when fears were rising that Japan's recession would delay the recovery of other Asian economies and hurt U.S. corporate profits.

The bargain-hunting behind yesterday's slight advance picked up momentum today after stocks in Hong Kong, Seoul, Singapore, Kuala Lumpur and Jakarta posted big gains amid speculation that Washington would try to prop up the Japanese yen.

Then, shortly before the open of U.S. stock trading, the United States sold dollars to support the slumping Japanese currency for the first time since 1992. Japan, meanwhile, pledged to accelerate efforts to revive its economy.

A drop in the dollar would "ease the pressure on earnings," said Guy Truicko, a money manager at Unity Management in Lake Success, N.Y., which manages $1 billion. "The technology sector and the capital goods sector get a significant portion of their sales and earnings from Asia," said Truicko.

In Asian markets today, Hong Kong stocks rose 6.3 percent after two days of big losses and South Korean shares rose 8.5 percent. Japan's Nikkei stock index fell slightly.

The rally extended to Europe where Frankfurt's DAX index rose 2.1 percent and London's FTSE 100 rose 1.8 percent.

Analysts said markets got a lift from the effort, through the sale of dollars by the Federal Reserve Bank to prop up Japan. But they also said traders were ready for bargain-hunting after the recent declines.

"People are generally enthused about the Fed action," said Brian Belski, market analyst at Dougherty Summit Securities in Minneapolis. But he also said selling had been overdone.

"So part of this is a technical rally and some bottom-fishing in technology stocks, and part of it is the so-called Fed intervention," Belski said.

On Wall Street today, advancing issues outnumbered decliners by a more than 2 to 1 on the New York Stock Exchange, with 2,181 up, 901 down and 474 unchanged. NYSE volume totaled 721.08 million shares, vs. 658.46 million yesterday.

Broad market indicators also surged, extending gains from a recovery among recently battered technology shares.

The Standard & Poor's 500 rose 19.51 to 1,107.10, and the technology-heavy Nasdaq composite index rose 23.28 to 1,776.40. The NYSE composite index gained 9.73 to 568.65, and the American Stock Exchange composite index advanced 6.61 to 695.27. The Russell 2000 index of smaller companies rose 5.71 to 444.08.

Treasury bond prices, meanwhile, were lower at midday.

U.S. bonds plunged, sending the 30-year bond down 1 11/32 points, or $13.44 per $1,000 bond, and its yield up 9 basis points to 5.74 percent from 5.66 percent late yesterday.

A falling dollar cuts into the returns Japanese investors receive on U.S. assets when the proceeds are converted into yen, making Treasury securities less attractive.

---

The Associated Press and Bloomberg News
contributed to this report.