Recession on track to be longest in postwar period

http://news.yahoo.com/s/ap/20090308/ap_on_bi_ge/the_worst_recessionRecession on track to be longest in postwar period



AP – ADVANCE FOR MARCH 9; graphic shows gross domestic product, payroll employment, personal income and periods … WASHINGTON – Factory jobs disappeared. Inflation soared. Unemployment climbed to alarming levels. The hungry lined up at soup kitchens.

It wasn't the Great Depression. It was the 1981-82 recession, widely considered America's worst since the depression.

That painful time during Ronald Reagan's presidency is a grim marker of how bad things can get. Yet the current recession could slice deeper into the U.S. economy.

If it lasts into April — as it almost surely will — this one will go on record as the longest in the postwar era. The 1981-82 and 1973-75 recessions each lasted 16 months.

Unemployment hasn't reached 1982 levels and the gross domestic product hasn't fallen quite as far. But the hurt from this recession is spread more widely and uncertainty about the country's economic health is worse today than it was in 1982.

Back then, if someone asked if the nation was about to experience something as bad as the Great Depression, the answer was, "Quite clearly, `No,'" said Murray Weidenbaum, chairman of the Council of Economic Advisers in the Reagan White House.

"You don't have that certainty today," he said. "It's not only that the downturn is sharp and widespread, but a lot of people worry that it's going to be a long-lasting, substantial downturn."

For months, headlines have compared this recession with the one that began in July 1981 and ended in November 1982.

_In January, reports showed 207,000 manufacturing jobs vanished in the largest one-month drop since October 1982.

_Major automakers' U.S. sales extended their deep slump in February, putting the industry on track for its worst sales month in more than 27 years.

_Struggling homebuilders have just completed the worst year for new home sales since 1982.

_There are 12.5 million people out of work today, topping the number of jobless in 1982.

"I think most people think it is worse than 1982," said John Steele Gordon, a financial historian. "I don't think many people think it will be 1932 again. Let us pray. But it's probably going to be the worst postwar recession, certainly."

The 1982 downturn was driven primarily by the desire to rid the economy of inflation. To battle a decade-long bout of high inflation, then-Federal Reserve Chairman Paul Volcker, now an economic adviser to President Barack Obama, pushed interest rates up to levels not seen since the Civil War. The approach tamed inflation, but not without suffering.

Hardest hit was the industrial Midwest; the Pacific Northwest, where the logging industry lagged from construction declines; and some states in the South, where the recession hit late.

Frustrated workers fled to the Sunbelt to find work. In Michigan, which led the nation in jobless workers, newspapers offered idled auto workers free "job wanted" ads in the classified section. Mortgages carried double-digit interest rates. When the 1982 recession ended, the national jobless rate had hit 10.8 percent.

Just like today, that recession led to political finger-pointing.

When the government reported a 10.1 percent jobless rate for September 1982, organized labor rallied across the street from the White House. A few protesters chained themselves to an entrance at the Labor Department. The U.S. Chamber of Commerce called it a national tragedy and blamed Democrats. Democrats called it a national tragedy and blamed Reagan.

Even months after the recession officially ended, Reagan was greeted in Pittsburgh by signs that said: "We want jobs, Mr. Hoover" and "Reagan says his economic program is working — are you?" President Herbert Hoover's term is forever linked in history with the Great Depression.

Those not as badly hurt have fuzzy memories of the 1981-82 recession.

Not Jim O'Connor of Pekin, Ill., who was president of United Auto Workers Local 974 when Caterpillar Tractor Co. was laying off workers in Peoria in the 1980s.

Maybe time has soothed the sting O'Connor felt, but he contends the economic problems facing workers today are worse than during the recession he survived nearly three decades ago.

"The days of walking out of one factory and walking into another one down the street are over," O'Connor said. He retired from Caterpillar in 2001 but thinks he might find part-time job to help pay his health insurance.

"When I hired in at Caterpillar in 1968, we had numerous factories here. Almost all of that has left the country or moved South. The unions don't have any leverage anymore at the bargaining table. So these young people (today) aren't only out of work, you know. They weren't making a living wage when they lost their job," he said.

Like Reagan did then, Obama is dishing up hope. Trouble is, people can't visualize any reward they might get from making it through this recession, said William Niskanen, an economic adviser to Reagan.

There's little hope of any gain from the pain. Falling housing and stock prices have undermined household wealth. People are worried about losing their jobs, their homes and their retirement savings all at a time when health care is weighing down income.

"In the 1980s, it was clear to people that the inflation rate was going to come way down and it did," Niskanen said. "There was a sense that we were going through a tough time for a while as a price of getting inflation down and that things would come back up. Today, they can't see any gain from what's going on."

Consumer confidence is in free fall. Banks are in peril. The overall economy, as measured by the GDP, shrank at a 6.2 percent annual rate in final three months of last year, the worst drop since the first quarter of 1982. The unemployment rate, at 8.1 percent in February, hasn't reached the 10.8 percent reported in November 1982, but the recession is not over.

It's not only blue-collar workers who are feeling the greatest anguish. Americans who are trapped in houses worth less than their mortgages are suffering. So, too, are people whose personal wealth is tied to the stock market. Personal wealth is dwindling in the U.S., and the effects of the financial meltdown have been felt around the world.

"This recession is broader, deeper and more complicated than virtually anything we have ever seen," Wachovia Corp. economist Mark Vitner said. "The whole evolution of the credit markets resulted in all sorts of complex financial instruments that are difficult to unwind. It's like trying to unscramble scrambled eggs. It just can't be done that easily. I don't know if it can be done at all."

He said he sees fear in the eyes of his clients.

"I've had people come up and hug me after a presentation, which is unusual," he said. "I haven't told them anything about how it's going to be better, but they just feel better having a better understanding of what's happening."

http://www.themalaysianinsider.com/index.php/business/16424-us-banks-sink-deeper-into-crisis-on-obamas-first-day

NEW YORK, Jan 21 — The banking crisis in the United States took an ugly turn for the worse yesterday.

Shares of major banks plunged as investors feared that Washington's bailout efforts were stalling, potentially forcing President Barack Obama's newly installed government to take far more dramatic steps to prop up the US financial system.
No major bank was spared the carnage. Bank of America's shares plunged 29 per cent; Citigroup's 20 per cent. State Street Corp, which reported sharply lower earnings, saw its shares plummet 59 per cent.

"The financial stocks got murdered," said Jack A. Ablin, chief investment officer at Harris Private Bank in Chicago. "They were basically cut in half."

At the core of the free fall in bank shares were concerns that US officials would need to overhaul their programme of shoring up financial institutions, a day after Britain announced its second financial bailout package for its own struggling banks in three months.

Investors are also becoming disheartened that banks such as State Street are continuing to report sharply worse results despite all the bailout efforts to date. The broader economic downturn is only compounding the pain by sapping demand for loans.

The country's economic problems were already high on Obama's priority list, but the breakdown of confidence in the country's banks, occurring on the same day of his inauguration, gave the matter fresh urgency. Attention will remain focused on the banking system today as Obama's choice for Treasury Secretary, Timothy Geithner, begins Senate confirmation hearings.
"The honeymoon is already over for the new administration with the way these stocks were beaten down," said Edward Yardeni, an independent market analyst. "This is not a vote of confidence."

The market's faith in the outgoing Bush administration's US$700 billion (RM2.45 trillion) bailout effort was already waning, with critics in Congress and on Wall Street saying there was little to show so far despite the massive outlays of taxpayer money. The government had already veered from its original goal of buying up toxic assets from banks, choosing instead to make direct injections of capital into banks, with few strings attached.

"The fear is that the government will come first and shareholders will come last," Joe Battipaglia, market strategist for the private client group at Stifel, Nicolaus & Co. "It's a de facto nationalisation because the government has run out of choices."

Many experts believe Obama's administration will have little choice but to pump more money into the banking sector or create an entity to buy banks' soured assets such as subprime mortgages so they'll start lending again.

Both moves would signal a dramatic increase in the government's involvement in the banking sector, possibly threatening shareholders whose holdings could be wiped out in the event of a government takeover.

Evidence that the banking crisis is worsening overseas also rattled investors. On Monday, the Royal Bank of Scotland forecast a loss of US$41.3 billion in 2008, leading the British government to increase its stake in RBS to nearly 70 per cent and launch a new round of bailouts for the country's banking industry. — AP

Singapore revises GDP growth as economy shrinks

SINGAPORE, Jan 21 – Singapore today further revised downwards its GDP growth for 2009, now to –5.0 from –2.0 per cent, as the ongoing decline in the world economy sends the republic into deeper recession.

Earlier this month, the government had forecast the republic’s GDP growth for the year would be between the range of –0.2 and 1.0 per cent.

The Ministry of Trade and Industry (MTI) said the preliminary estimates for the Singapore economy showed real GDP contracted by 3.7 per cent in the fourth quarter of last year following the decline of 0.2 per cent in the preceding quarter.

The MTI also revised downwards the inflation rate in 2009 to –1.0 to 0 per cent, largely in expectation of a continued downward correction of commodity prices from the peaks in 2008 in line with the weakening global economy.

It said the manufacturing, wholesale and retail trade, transport and storage, information and communications and financial services sectors registered further slowdowns compared to the third quarter of 2008.

The ministry said Singapore’s economy for 2008 was estimated to have grown by 1.2 per cent compared with 7.7 per cent in 2007.

The manufacturing sector was estimated to have contracted by 4.1 per cent, down from an expansion of 5.8 per cent in 2007, while growth in the wholesale and retail trade and the transport and storage sectors moderated to 2.6 per cent and 3.2 per cent, respectively, last year, from 7.3 per cent and 5.1 per cent in 2007.

MTI said after a robust 16.9 per cent growth in 2007, the financial services sector grew by 7.1 per cent in 2008, with the second half of the year seeing a significant decline in fund management and stockbroking activities following the global financial crisis.

Saying the economic downturn was expected to continue this year, the ministry said the weaker outlook for the Singapore economy compared to earlier forecasts reflected global economic activities had declined faster and deeper, and the spillover effects on key sectors of the economy would be stronger.

It said latest data in the past two weeks on retail sales and unemployment in the United States, industrial production in Europe and exports by Asian economies suggested that external demand conditions had weakened to a greater extent than earlier estimated.
“These developments will have a major impact on Singapore,” MTI added. – Bernama

Asia ‘may recover in 2nd quarter’

SINGAPORE, Jan 14 – The latest in what has been a stream of predictions about how Asia might come out of the recession suggests that recovery might kick in as early as the second quarter of this year.


HSBC told a media conference yesterday that massive policy responses and a steep plunge in commodity prices should fuel the rebound.

That would mean a V-shaped recovery in which the economy bottoms out and rallies quickly, but it would not be as fast as the recovery from previous crises.

The bank pointed to rounds of aggressive interest rate cuts and substantial stimulus packages in the region, which should spur domestic demand.

“The cavalry is on its way in the form of the most significant policy response ever,” said senior Asian economist Robert Prior-Wandesforde. “The policy easing and sharp falls in commodity prices should lead to stronger domestic demand, thus generating recovery in Asia.”

This could take place in the next few months. But HSBC cautioned: “Deep and sharp V-shaped recoveries have been the hallmark of Asia in the past, but we suspect that this time around, the second upward leg will not be quite as steep.”

Last week, BNP Paribas forecast a V-shaped recovery in Asia next year as the massive policy responses kick in.

Professor Danny Quah, head of economics at the London School of Economics and Political Science, who gave a lecture on Modern China organised by the National University of Singapore’s East Asian Institute yesterday, said East Asia is now in a stronger position than during the Asian financial crisis.

Analysts also noted that the sharp correction in commodity prices, most notably oil, will also benefit the region as Asia is more of an oil importer than exporter.

In an earlier report, Morgan Stanley analysts said a US$55 fall in the price of crude oil is like a US$385 billion (S$572 billion) tax cut for Asian consumers, equal to about 5 per cent of the region’s total gross domestic product. Oil was trading at around US$70 a barrel at the time. It is now trading at US$38.

There could also be light at the end of the tunnel for Singapore next year. HSBC expects the economy to shrink 2.8 per cent this year – below the Government’s forecast of between -2 and 1 per cent – before surging 5.5 per cent next year.

Lower inflation, thanks to falling commodity prices, a supportive policy environment with expected fiscal easing and improving regional trade are set to fuel recovery.

It noted: “While the next six months are going to be very challenging, we believe the ingredients for an end-2009 recovery are falling into place.”

HSBC expects continued volatility in Asian stocks for the year as “ultra-low interest rates and huge fiscal packages” meet global deleveraging. It tipped regional markets to end either 10 per cent higher or lower from their current levels.

But it said this year will be nowhere near as bad as last year, when Asian equities fell by 53 per cent. It advised investors to go for blue-chip household-name stocks, which “should give decent upside during the upswings, but avoid excessive downside risk during the corrections”. – The Straits Times

Asia stocks slip in long wait for U.S. jobs data

http://news.yahoo.com/s/nm/20090109/bs_nm/us_markets_global

HONG KONG (Reuters) – Asian stocks edged down and the U.S. dollar drifted higher on Friday, as investors braced for the December U.S. payrolls data, expected to show sharp job losses and dash hopes for a speedy recovery this year.

Major European stock markets were expected to open as much as 1 percent higher, according to financial bookmakers, after Citigroup agreed to support legislation that would let troubled borrowers save their homes through bankruptcy.

Analysts predict the world's largest economy probably shed more than half a million jobs last month, bringing job losses in 2008 to a post-war record, boding ill for Asia's struggling exporters who have been starved of demand from developed nations.

Global equities, emerging market currencies and high-grade credit had all benefited in the last month from a steady improvement in investors' risk tolerance. However, dour corporate outlooks, including from the world's top retailer Wal-Mart, and prospects for higher unemployment have curbed appetite for riskier assets.

"Market watchers are already prepared for bad news on the jobs front. They expect unemployment to have risen to 7 percent in December," said Linus Yip, strategist with First Shanghai Securities in Hong Kong. "But the real test is in how Wall Street will react to the news tonight."

The MSCI index of stocks in the Asia-Pacific region outside Japan inched down 0.2 percent, creeping further away from a one-month high reached on Wednesday.

Japan's Nikkei share average finished 0.45 percent lower, with big exporters such as Honda Motor Co and Canon Inc among the biggest drags on the index.

The scandal surrounding Indian IT company Satyam Computer Services sparked fears foreign investors may pull out of the country, especially so soon after attacks that paralysed Mumbai late last year. The chairman of the company resigned on Wednesday after saying that 94 percent of the cash and bank balances on the company's book at the end of September did not exist.

The BSE index was down 2 percent, and Satyam's stock was savaged, falling 50 percent.

NO CHOICE BUT CUT

South Korean stocks tied with Indian equities as the region's biggest decliners, with the benchmark KOSPI also down 2 percent after the country's central bank cut interest rates by 50 basis points to a record low and warned Asia's fourth-largest economy would slow further.

"The Bank of Korea has no choice but to cut interest rates, given a slowing economy. The economy probably contracted in the fourth quarter and the first quarter is seen worse," said Park Sang-hyun, chief economist with HI Investment & Securities in Seoul.

Policymakers in China, India and Korea were the most aggressive in Asia in trying to protect their economies as the worsening global downturn really bit into the region in the second half of 2008.

But other Asian central banks have lately had to step up their actions with export sectors gutted, domestic growth crippled and bank lending still sluggish. Taiwan unexpectedly slashed rates and Indonesia eased more than forecast this week.

Bond market investors meanwhile have been more focused on new global bond issuance, hungry for higher yields, particularly with credit markets showing signs of stabilization.

The cost of insuring investment-grade bonds against default or restructuring in Asia ticked up but remained much lower as investors bet massive fiscal stimulus plans and rock-bottom interest rates will eventually help global growth.

U.S. corporate debt proceeds of $19.9 billion in the first full week of 2009 were the highest since May 2008, according to Thomson Reuters data, as companies took advantage of the window of calm in capital markets to push through deals.

The budding enthusiasm has slowly peeled money away from U.S. Treasuries. The benchmark 10-year Treasury note yield was steady at 2.44 percent, but has climbed around 40 basis points since hitting a five-decade low late in 2008.

The 30-year bond yield was at 3.04 percent.

Japanese government bond futures ticked up 0.2 point after hitting a 1-month low on Thursday.

The dollar was little changed at 91.15 yen. The dollar hit a one-month high around 94.65 yen on Tuesday.

The euro fell 0.3 percent to $1.3660. The euro has bounced between $1.3964 and a three-week low of $1.3312 this week.

U.S. light crude oil for February delivery climbed above $42 a barrel, up 1.4 percent, as dealers tried to find a floor, thinking most of the bad news has been priced in.

Rabbi: It breaks my heart to see Israel’s stupidity

taken from Malaysian Insider

By Michael Lerner

JAN 5 – Israel’s attempt to wipe out Hamas is understandable, but stupid.
No country in the world is going to ignore the provocation of rockets being launched from neighbouring territory day after day. If Mexico had a group of anti-imperialists bombing Texas, imagine how long it would take for America to mobilise a counterattack. So, Israel has every right to respond.

But the kind of response matters. Killing 500 Palestinians and wounding 2,000 others (at the time of writing) is disproportionate. Hamas can harass, but it cannot pose any threat to the existence of Israel.

And, just as Hamas’s indiscriminate bombing of population centres is a crime against humanity, so is Israel’s killing of civilians (at least 130 so far in Gaza, not to mention the thousands in the years of the occupation of the West Bank and Gaza).
Hamas had respected the previously negotiated ceasefire except when Israel used it as cover to make assassination raids. Hamas argued that these raids were hardly a manifestation of a ceasefire, and so as symbolic protest it would allow the release of rocket fire (usually hitting no targets).

But when the issue of continuing the ceasefire came up, Hamas wanted a guarantee that these assassination raids would stop.

And it asked for more. With hundreds of thousands of Palestinians facing acute malnutrition, Hamas insists that the borders be opened so that food can arrive unimpeded. And in return for the captured Israeli soldier Gilad Schalit, it asks for the release of 1,000 Palestinians imprisoned in Israel.

Hamas has made it clear that it would accept the terms of the Saudi Arabian peace agreement, though it would never formally recognise Israel.

It would live peacefully in a two-state arrangement, but it would never acknowledge Israel’s “right to exist”. This position is unnecessarily provocative, and is deeply self-destructive for Palestinians who believe it is the only symbolic weapon they have left.
How do we get out of this destructive spiral? The first step is for the world to demand an immediate ceasefire. That ceasefire should be imposed by the United Nations and backed unequivocally by America. Its terms must include the following:

– Hamas stops all firing of missiles, bombs or any other violent action originating from the West Bank or Gaza, and co-operates in actively jailing anyone from any faction that breaks this ceasefire.

– Israel stops all bombing, targeted assassinations or any other violent actions aimed at activists, militants, or suspected terrorists in the West Bank or Gaza, and uses the full force of its army to prevent any further attacks on Palestinians.

– Israel opens the border with Gaza and allows free access to and from Israel, subject only to full search and seizure of any weapons. Israel allows free travel of food, gas, electricity, water and consumer goods and materials including from land, air, and sea, subject only to full search and seizure of any weapons or materials typically used for weapons.

– Israel releases all Palestinians in detention and returns them to the West Bank or Gaza according to the choice of the detainees or prisoners. Hamas releases Gilad Schalit and anyone else being held by Palestinian forces.

– Both sides invite an international force to implement these agreements

– Both sides agree to end teaching and/or advocacy of violence against the other side in and outside mosques, educational institutions, and the media.

– This ceasefire would last for 20 years. Nato, the UN, and the US all agree to enforce this agreement and impose severe sanctions in the event of any violations.

These steps would make a huge difference, isolate the most radical members of each side from the mainstream, and make it possible to then begin negotiations between Israel and the Palestinians on a broader and deeper set of issues.

The basic condition for creating peace is to help each side feel “safe”. A first and critical step is to speak in a language that is empathic toward the suffering of each people in a climate of discourse in which both sides’ stories are heard and understood.

Yet Israel, as the militarily superior power, ought to take the first steps: implementing a massive Marshall Plan in Gaza and in the West Bank to end poverty and unemployment, rebuild infrastructure and encourage investment; dismantle the settlements or make settlers become citizens of a Palestinian state; accept 30,000 Palestinian refugees annually back into Israel for the next 30 years, apologise for its role in the 1948 expulsions and offer to co-ordinate a worldwide compensation effort for all that Palestinians lost during the Occupation; and recognise a Palestinian state within borders already defined by the Geneva Accord of 2003.

This is the only way Israel will ever achieve security. It is the only way to permanently defeat Hamas and all extremists who wish to see endless war against Israel.

The most significant contribution the new Obama administration could make to Middle East peace would be to embrace a strategy that homeland security is best achieved not by military or economic domination but by generosity and caring for others.

If this new way of thinking could become a serious part of US policy, it would have an immense impact on undermining the fearful consciousness of Israelis who still see the world more through the frame of the Holocaust and previous persecutions than through the frame of their actual present power in the world.

It breaks my heart to see the terrible suffering in Gaza and in Israel. As a religious Jew I find it all the worse, because it confirms to me how easy it is to pervert the loving message of Judaism into a message of hatred and domination.

I remain in mourning for the Jewish people, for Israel and for the world.* Rabbi Michael Lerner is editor of Tikkun magazine

World stocks rise on US rally, stimulus hopes

taken from http://www.themalaysianinsider.com/index.php/business/15284-world-stocks-rise-on-us-rally-stimulus-hopes-

Tokyo Stock Exchange's female employees dressed in traditional Japanese kimono react as a person in a cow outfit, representing the year of the Ox in the Chinese zodiac, gives a cheer, wishing for a bullish market during a ceremony marking the start of the New Year's first trading in Tokyo. Japanese stocks opened the year stronger, with the benchmark index jumping to a 2-month high today, lifted by optimism over a US economic stimulus plan. Japanese on the electric board reads: A Happy New Year. - AP pic

HONG KONG, Jan 5 - Asian stock markets rose strongly today, with benchmarks in Hong Kong and Shanghai gaining more than 3 per cent, as Wall Street's rally and government stimulus plans buoyed investor hopes for 2009. European markets also opened higher.

Investors seemed encouraged after President-elect Barack Obama urged congressional leaders Saturday to move quickly on recovery measures that aides say could cost as much as US$775 billion RM2,697 billion), including a reported US$300 billion in possible tax cuts.

Also helping sentiment, Chinese Premier Wen Jiabao said over the weekend that Beijing would enact new measures to help the steel and auto industries.

That comes on top of a massive stimulus package announced in November.

In a shortened half-day session, Tokyo's Nikkei 225 stock average gained 183.56 points, or 2.1 per cent, to 9,043.12, its first finish above the 9,000-point line since Nov. 10.

In greater China, Hong Kong's Hang Seng climbed 3.5 per cent to 15,563.31 and Shanghai's key index gained 3.3 per cent to 1,880.72. Singapore's benchmark jumped 4.5 per cent, with stock measures in Taiwan, India, South Korea, Malaysia and Thailand higher as well.

Europe followed Asia higher, though gains were smaller. Britain's FTSE 100 rose 0.4 per cent, Germany's DAX advanced 0.8 per cent and France's CAC 40 added 0.4 per cent.

The upbeat mood came after global markets rang in the new year with a strong advance despite more dismal economic news, including evidence that manufacturing in the US, Europe and China was deteriorating amid the slowdown.

Though increasingly optimistic markets will fare better this year after the relentless selling in 2008, investors are bracing for a difficult first half, when company earnings and economic data could prove especially bleak. Still, the market's resilience of late could be a sign that many have already started positioning for a possible turnaround in the world economy and equities prices later in the year.

"We are still trading more on sentiment than fundamentals, and the sentiment is that fiscal stimulus will allow the economy to recover," said Dariusz Kowalczyk, chief investment strategist for CFC Seymour in Hong Kong.

"The market is relatively cheap, and with investors hoping for a recovery in the global economy in the second half, it makes sense to buy now before that happens."

Global markets are likely to be tested this week with fresh US data on everything from jobs to manufacturing and car sales in the world's largest economy.

The session was the year's first for a number of Asian countries, including Japan, where markets were still closed Friday, and volumes were higher across the region as traders returned from the holidays. Rising commodities prices lifted energy and metal producers, and Japanese shares got a boost from a weakening yen, which helps the country's exporters.

Sony rose 2.5 per cent and electronics giant Panasonic Corp. gained 2.5 per cent. Toyota jumped 3.6 per cent and Honda Motor Co. added 2.7 per cent.

In his weekend radio address, Obama urged Congress to move quickly on an economic recovery plan, which aims to create 3 million jobs. Congressional aides briefed on the measure say it probably would include tax cuts of US$500 to US$1,000 for middle-class individuals and couples; Obama advisers told The New York Times on Sunday that tax cuts for workers and businesses could total US$300 billion.

Confidence also got a boost from Wall Street's gains on Friday, when the Dow Jones industrial average jumped nearly 3 per cent, closing above 9,000 for the first time in two months as investors shrugged off a weaker-than-expected report on manufacturing.

Wall Street futures were modestly lower, pointing to a weak opening Monday in New York. Dow futures were down 22 points, or 0.3 per cent, at 8,936 and S&P 500 futures were off 0.8 points, or 0.1 per cent, at 924.60.

In India, Mumbai's Sensex climbed 2 per cent after the government announced plans late Friday to lower key interest rates by 1 per centage point and boost spending to arrest the country's slowing economic growth. It was the second stimulus package announced in the past month.

In Japan, financials soared amid reports that the government might purchase bad loans from banks, with Mizuho Financial Group up 13.3 per cent and Sumitomo Mitsui Financial Group gaining 11. 4 per cent.

Crude oil price rose in Asia trade, with light, sweet crude for February delivery up 26 cents at US$46.60. The contract soared last week to settle Friday at US$46.34, up US$1.74, amid spiraling violence in Gaza and expectations of OPEC productions cuts.

In currencies, the dollar rose to 92.89 yen, up from yen 91.79, and the euro skidded to US$1.3687, down from US$1.3918. - AP