Asian stocks rose by more than 3 percent Monday, the most in four months, helped by results from Citigroup that offered some reassurance about the financial sector's stability.

The U.S. dollar, though, slid with more results from banks due this week.

Oil prices edged up but were still more than $17 below their record high above $147 a barrel this month, a fall that has also supported shares of exporters in the region.

But analysts were reluctant to call an end to the fall in global stocks, which were still down nearly 20 percent from their peak late last year, saying much depended on quarterly earnings at banks such as Bank of America or industrial companies such as Caterpillar and Honda Motor.

"It is too premature to assume that the bull market is coming back," said Albert Hung, chief investment officer at Alleron Investment Management in Sydney. "There are some concerns that the earnings growth forecast for fiscal 2009 is still too high, so there may be some earnings revision downwards."

The MSCI index of Asia-Pacific shares outside of Japan was up 3.2 percent on the day, the biggest single-day gain since March 25. The rise Monday broke a steep downward trend that had persisted since May 19.

Markets in Japan were closed for a public holiday.

The Hang Seng in Hong Kong rose 3 percent, with HSBC leading the way after The Sunday Telegraph newspaper reported that China's sovereign wealth fund was in talks to buy shares in the bank in the open market.

South Korea's benchmark index, the Kospi, jumped 3.5 percent, led by gains in the shares of the index heavyweights Samsung Electronics and Posco.

Taiwan stocks ended up 4 percent, their biggest rise in nearly four months, led by strong gains in financial shares like Cathay Financial, as worries over their exposure to troubled U.S. mortgage lenders eased.

China's main stock index, the Shanghai composite, rose 3 percent, led by financials and property shares, as investors were cheered by the leap in Hong Kong's market and better-than-expected earnings at Citic Securities.

Indian shares rose about 1.6 percent after the prime minister said his coalition government would win a confidence motion in Parliament. But investors were wary prior to the vote Tuesday, which was expected to be close.

Southeast Asian stocks were mostly up, but Vietnam lost 2.5 percent after domestic fuel prices were raised.

Immediate concerns about the global impact of a weak U.S. financial sector eased after Citigroup, the largest U.S. bank, reported a second-quarter loss of $2.5 billion, less than expected.

The picture painted by higher-than-expected results from JPMorgan, Citigroup and IBM was tainted somewhat by lower-than- forecast results from technology sector bellwethers like Google and Microsoft. In addition, food and energy prices - though well off their peaks - continue to fuel inflation at a time when the global economy is slowing down.

Global asset-allocation strategists with JPMorgan said they were staying overweight on countries that had done much to control inflation, like Mexico, Taiwan and Thailand, against those that had not done enough, including India and Brazil.

"Given extreme bearish positions and a positive tone from earnings reports, it is quite likely that equities will see a further upmove in coming weeks on shortcovering. Into August, though, economic news will likely remain negative," their note to clients said.

The U.S. dollar, which rose broadly last week, slipped against the euro and the yen Monday prior to the raft of bank earnings this week. The euro rose 0.1 percent to $1.5865, about two cents below an all-time high touched last week. Against the yen, the dollar was down 0.3 percent at yen106.64.

Crude prices edged up from late New York levels but remained just below $130 a barrel through much of Asian trade as talks between world powers and Iran, the fourth-largest oil exporter, proved inconclusive.

Originally published by Reuters.

(c) 2008 International Herald Tribune. Provided by ProQuest Information and Learning. All rights Reserved.

Story Source: International Herald Tribune