Asian stocks rose today after five days of losses, as bruised investors picked up shares in firms such as Sony and BHP Billiton.
These stocks had been beaten down during a global sell-off.
Share indexes across most of the region rose between 1 and 2 per cent, but analysts warned the volatility in global markets over the past week -- marked by a massive sell-off in stocks and short-covering in the yen -- may not have run its full course.
'My feeling is we probably do have more downside, and what we're seeing now is a bounce from oversold conditions,' said Sydney-based Shane Oliver, head of investment strategy at AMP Capital Investors.
European markets were seen opening lower, despite the gains in Asia, with London spread betters forecasting the FTSE 100 to open between 5 points lower and 3 points higher, the CAC 40 down 7-20 points and the DAX 14-27 points weaker.
The dollar and the euro rebounded from three-month lows against the yen, as stock market gains helped stem a rush by investors to cash out of riskier assets and pay off the cheap yen loans that had funded them.
'The stock market is showing signs of some stability and spurring short-covering, which has spilled over to the currency market,' said Shogo Nagaya, a senior trader at Nomura Securities.
'It's premature to say the markets have bottomed out until we see full-fledged investor buying in both the stock and currency markets, but at least we feel the worst is over.'
Oil steadied above $60 a barrel, after dropping more than 2 per cent on Monday on fears of faltering demand.
Japanese government bonds and US Treasuries traded in Asia edged lower, taking a breather after racing to three-month highs in the previous session as investors deserted stocks in favour of safer assets.
'I think market players are watching the recovery in share prices,' said Mitsumaru Kumagai, chief JGB strategist for Merrill Lynch. 'The key now is whether the weakness in global equities will continue as a trend or whether it will stop.'
A broad rout in equity markets had been triggered by a near 9 per cent fall in China's main stock index last Tuesday.
That had combined with jitters about stalling US growth and fears that world stock markets -- many of which had been trading around record highs -- were overvalued.
MSCI's global equity index has fallen more than 6 per cent from its close on Feb. 26, while a measure of emerging markets -- which were hardest hit in the flight from riskier investments -- was down more than 9 per cent.
Tokyo's Nikkei rose 1.2 per cent, regaining some poise after tumbling 8.6 per cent during a five-day slide, while the broader Topix was up 1.8 per cent to book its biggest one-day percentage gain since October.
'The Nikkei fell nearly 2,000 points, so stock prices certainly don't look expensive now,' said Takahiko Murai, general manager of equities at Nozomi Securities.
Consumer electronics giant Sony gained 4.1 per cent, after falling more than 11 per cent during the previous five sessions, and car maker Toyota Motor rose 3.5 per cent, after dropping 10 per cent during the same period.
MSCI's broadest index of Asian shares outside Japan was up 1.9 per cent by 0610 GMT.
Australia's benchmark index gained 2.1 per cent as BHP, the world's biggest miner, rose 2.7 percent and rival Rio Tinto added 1.9 per cent.
Hong Kong's Hang Seng rose 1.6 per cent in morning trade and Singapore's Straits Times gained 1 percent. Taiwan's benchmark closed up 1.5 per cent, and South Korea's KOSPI finished 2 per cent higher.
'This looks more like a technical rebound than the beginning of a trend. We are going to need at least one or two months for markets to stabilise and return to the prior rising trends,' said Kim Yung-min, a fund manager at SH Asset Management in Seoul.
The dollar bought around 116.40 yen at 0610 GMT, up more than 1 yen from day's lows as it pulled away from a three-month low of 115.16 touched on Monday.
A surge in the Japanese currency had been driven by a sharp unwinding of so-called carry trades, in which investors borrow in low-yielding yen to buy higher-yielding, riskier assets elsewhere.
The euro traded around 152.55 yen, rebounding sharply from a three-month low of 150.74 yen.
'Stock markets don't appear to be sliding significantly further, and that could help the currency market consolidate,' a dealer at a Japanese bank said.
March 10-year Japanese government bond futures slipped 0.11 point to 135.13, while benchmark 10-year yields rose 0.5 basis point to 1.625 per cent.
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