Asian stock markets rise after Wall Street rally

Initial reaction in the region to the Citigroup news--which broke midday Monday in Asia--was tepid, and most benchmarks had ended the day lower. But after seeing markets in Europe and the U.S. surge overnight, Asian investors joined in the rally.

Gains faded somewhat as trading progressed, reflecting the persistent concerns investors have about the length and depth of slumps in the U.S.--a vital export market--and broader global economy.

"Most investors are still cautious on the U.S. economy," said Castor Pang, an analyst at Sun Hung Kai Financial in Hong Kong, adding that Tuesday's gains were likely a temporary rebound.

In Japan, which had been on holiday Monday, the Nikkei 225 stock average was up 3.4 percent at 8,179.00 after surging more than 4 percent earlier.

Hong Kong's Hang Seng index, up 4.6 percent in early trading, rose 3.3 percent by midday at 12,873.80. South Korea's Kospi, which had fallen 3.4 percent Monday, rose 1.5 percent, while Australia's key index was up 3.7 percent.

Wall Street and European markets surged Monday on news that the U.S. government will take a $20 billion stake in Citigroup and guarantee hundreds of billions of dollars in risky assets. The Dow Jones industrials soared 396.97 points, or 4.93 percent, to 8,443.39 Monday--the first two-day advance since Oct. 31.

Britain's FTSE 100 index jumped 9.8 percent to 4,152.96, Germany's DAX soared 10.3 percent to 4,554.33 and France's CAC-40 gained 10.1 percent at 3,172.11.

Japanese officials in Tokyo hailed Washington's move.

Economy Minister Kaoru Yosano called the plan a "courageous decision" to save the massive global banking group, noting that the world's economy could be affected by Citigroup's fate, according to Kyodo news agency.