Stocks staged a comeback across most of Asia on Thursday as a larger-than-expected profit from Korea's Hyundai fed optimism that the auto sector could be nearing a turnaround and tech shares found strength on the back of buoyant earnings from Apple
European shares were more subdued in early trading with major indexes slightly lower.
The turnaround in Asian equities took the wind out of an earlier rally in government bonds, gold and Japan's yen that was fueled by a weakening outlook for the global economy.
A surprisingly large profit from Credit Suisse eased some of the concern over credit losses at global banks that had flared again following a big loss from Morgan Stanley and a report that top Japanese broker Nomura had also fallen deeply into the red.
Japan's Nikkei <.N225> added nearly 1.4 percent, while MSCI index of Asia Pacific shares excluding Japan gained 1.3 percent. South Korea's Kospi <.KS11> rose 0.9 percent, led by a 3 percent rise in Hyundai Motor <005380.KS>.
While Hyundai's profit fell, it managed to gain global market share and analysts said efforts by global governments to stimulate growth would give the sector a lift later this year.
Car makers are suffering their worst-ever downturn and investors are edgy about the future of General Motors
Today's gains are all about results ... we have had quite solid set of earnings reports lately and tomorrow Samsung Elec is said to be set to post quite a strong operating profit, said Y.S.Rhoo, a market analyst at Hyundai Securities in Korea.
Samsung <005930.KS> gained nearly 3 percent in step with the tech sector following Apple's earnings, which were lifted by strong sales of iPods and iPhones.
Futures on the Nasdaq 100 were up more than 1 percent, pointing to more gains in the group when the U.S. session gets underway.
In Japan, Pioneer <6773.T> jumped more than 23 percent after a company source said Honda Motor Co <7267.T> was finalizing plans for a big investment in the electronics maker. Honda rose 1.7 percent.
Asia's equity gains came against the headwinds of the latest grim report on the global economy from the International Monetary Fund.
The IMF slashed its forecasts for every major country and predicted worldwide gross domestic product would contract by 1.3 percent this year, marking the deepest post-World War Two recession by far.
Still, Asia's rally was not matched in Europe, where early action had most major indexes down about half a percent. The pan-European FTSEurofirst 300 was off by 0.4 percent.
Credit Suisse shares were a bright spot, gaining 6.5 percent.
Japan's Nomura Holdings also rallied back from a 4 percent drop to finish unchanged. It had been dragged lower after the Nikkei business daily reported the broker may post a loss of more than $7 billion for the year ended in March.
The country's second-largest bank, Mizuho Financial Group <8411.T>, estimated after the close that it would report a loss of about $6 billion for 2008/09.
Investors remain skeptical toward the financial sector ahead of the release of U.S. bank stress tests on May 4. The tests were designed to see how the country's largest banks would fare if the U.S. recession proved unexpectedly severe.
On Wednesday, a larger-than-expected quarterly loss from Morgan Stanley helped drag the U.S. benchmark Standard & Poor's 500 lower.
S&P 500 futures were up 0.8 percent, indicating a firmer open for Wall Street.
YEN AND BOND RALLIES PETER OUT
The return of appetite for equities dented an earlier rally in the yen, and the Japanese currency edged lower against the dollar and euro.
The dollar last traded at 98.06 yen, up from 97.97 the day before and the euro ticked up to 127.65 yen from 127.37 as banking sector fears eased.
Uncertainty about the European Central Bank's next monetary policy move has kept selling pressure on the euro this month.
U.S. Treasuries were down modestly with stock futures gaining.
The yield on benchmark 10-year Treasury notes rose to 2.95 percent from 2.94 percent late in New York. The U.S. yield curve continued its steepening trend with the spread between 10-year notes and 2-year notes climbing above 198 basis points, the widest gap in 10 days.
Japanese bond futures gained but ended off their session high. The 10-year contract expiring in June rose to 137.26. Earlier it had hit its highest since April 3.
Spot gold was up less than 1 percent at $891.75 an ounce from $889.15 late in New York.
U.S. crude prices fell 0.6 percent, or 21 cents, to $48.57 a barrel on worries that the weak global economy will continue to undermine energy demand.
(Editing by Neil Fullick)