A rate cut would mean investors won't earn the kinds of returns they are now in U.S. assets, and so some were looking to take their money elsewhere. Also in Tokyo, the Nikkei Stock Average surged 747.15 points, the second biggest point gain this year, to close at 14,790.06, an increase of 5.32 percent. Japanese stocks rose on reports that a compromise was being worked out between the ruling party and opposition lawmakers over efforts to reform Japan's debt-ridden banks. Such a move could benefit the rest of troubled Asia, given the big role that Japan plays as the region's key lender. The twin gains by Japan's currency and stocks offered a brief glimmer of hope, but traders were quick to say that it was too early for optimism about a sustained rally in the world's second-largest financial markets.
Economic growth remains stagnant, and consumer spending shows no sign of recovery.
And as good as the Nikkei was, Hong Kong's benchmark Hang Seng Index ended at a six-week high, finishing up 7.9 percent to 8,076.76. In Hong Kong, new measures were announced over the weekend and Monday to strengthen the currency board system and to reign in illegal speculation on the territory's stock and futures markets. That boosted bank liquidity, cut interest rates sharply, and buoyed investors' confidence, analysts said. In Singapore, the Straits Times Index closed at 862.10, a 7 percent increase, its best performance this year. In Thailand, the SET index surged 6 percent to 220.56 points.