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Hong Kong, Tokyo shares up

PORT MORESBY, Papua New Guinea (PNG Post-Courier, Nov. 5, 2008) - Asian stocks and the dollar climbed yesterday as Democrat Barack Obama was elected U.S. president, raising hopes of fresh action to revive the economy amid the worst global financial crisis in decades.

"Markets generally favor a Republican government," said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC. "But this belief has collapsed amid the financial crisis."

Hong Kong shares jumped 5.7 percent by midday while Japan’s Nikkei stock index was up 2.5 percent in the afternoon. Stocks rose 4.4 percent in Singapore and 2.7 percent in Sydney.

"We’re seeing the Obama rally," Patrick Crabb, senior sales trader at Goldman Sachs JB Were said in Melbourne.

The euro fell to 1.2868 dollars in early afternoon trade in Tokyo, compared with 1.2942 in the morning before television networks projected Obama’s victory.

Obama is expected to "bring change to the country amid an unprecedented crisis," said Saburo Matsumoto, chief forex strategist at Sumitomo Trust Bank.

"Even if economic figures and sentiment remain grim, markets still have high expectations for the policies that he will iron out from January," he added.

Obama, 47, will be inaugurated as the 44th US president on January 20 and inherit an economy mired in the worst financial crisis since the 1930s.

Dealers had said before the vote that a decisive win by either Obama or his Republican rival John McCain would clear up uncertainty about the leadership of the economy and the handling of the financial crisis. McCain conceded defeat, calling for Americans to unite behind their new leader.

The Dow Jones Industrial Average added 3.28 percent and the Standard & Poor’s 500 index gained 4.08 percent yesterday as Americans went to the polls.

Investors were also anticipating further interest rate cuts by world central banks to try to thaw frozen credit markets and ward off a global recession.

The European Central Bank and the Bank of England are both widely expected to make cuts when they hold separate meetings on Thursday.

"Signs the worldwide measures taken to shore up the banking sector are easing the pressures in global cash and credit markets has also helped underpin investor confidence," said NAB Capital analyst John Kyriakopoulos.

But while the credit crunch is showing signs of easing, worries are growing about the prospect of a global economic downturn.

In Australia, the government warned the global financial crisis would cut the nation’s economic growth, slash billions of dollars off the forecast budget surplus and increase unemployment.

The Australian economy is expected to grow 2.0 percent this financial year, down from 2.75 percent previously projected, the government said, a day after the central bank there slashed its key interest rate by 75 basis points.

"While Australia is clearly not immune from the effects of the global financial crisis and the global downturn, we are better placed than most other countries to withstand the fallout," said Treasurer Wayne Swan.

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