Global markets rally on huge cash injection

Asian and European equities surged higher on Wednesday, mirroring an overnight rebound on Wall Street after major central banks announced a massive cash injection for stressed financial markets.
However, dealers voiced scepticism over whether the concerted central bank action would head off the global credit crunch and bring stability to choppy world stock markets.
Japanese share prices soared 1.6 percent on Wednesday, Hong Kong surged 1.9 percent and Australian shares leapt 2.4 percent higher.
In midday trading in Europe, Frankfurt jumped 1.67 percent and Paris climbed 2.01 percent. The London stock market rallied 1.85 percent as investors awaited the British government's annual budget announcement.
Dealers took their cue from Wall Street where stocks soared Tuesday as the US Federal Reserve and other central banks moved to pump hundreds of billions of dollars into the financial system to ease a global credit crunch.
The US Dow Jones Industrial Average vaulted by more than 416 points in the biggest single-day point gain since July 2002.
"While the plan will not resolve all the problems, it may help stem the vicious cycle in the credit market," said Yumi Nishimura, manager for equity marketing at Daiwa Securities SMBC.
The Fed-led action was the latest in a series of steps to get banks lending again following the global credit squeeze which erupted last August amid fears over exposure to the slumping US subprime housing sector.
"There is a degree of scepticism still in the market over the potential impact these additional measures will have on stabilising the financial markets," said economist Derek Halpenny at The Bank of Tokyo-Mitsubishi UFJ in London.
"Dollar sentiment remains dire, and the majority of market participants believe worse is still to come especially after Fed Chairman Bernanke himself acknowledged the likelihood of financial institutions in the US failing," he added.
In Asia, investors locked in some gains in late trade, worried that the Fed's plan might not be enough to rescue troubled financial institutions and prevent the US economy from slipping into a recession -- if it was not already in one.
"The Fed's liquidity measure helped remove extreme pessimism towards the market, urging investors to buy back shares," Shinko Securities market analyst Yutaka Miura said.
"But, after a round of short covering, investors would not buy up stocks in the absence of more incentives other than a softer yen and strong US stocks," Miura said.
In New York on Tuesday, the Dow Jones Industrial Average vaulted 3.6 percent on Tuesday to close at 12,156.81, the blue-chip index's biggest gain in almost six years after the Fed said it would pump 200 billion dollars into the markets.
The US Fed said Tuesday it was offering 200 billion dollars in a new Term Securities Lending Facility auction, with a term of 28 days instead of overnight under an existing program.