Asian stocks rose Wednesday as investors welcomed the move by the U.S. Federal Reserve and other central banks to ease pressure on the world's credit markets.Wall Street's big rally also boosted market sentiment in Asia, but many analysts remained wary, pointing to recent data indicating the U.S. economy — a vital export market — could be sliding into a recession. Stocks in Japan and Hong Kong pared gains in afternoon trading after the initial euphoria wore off.

"There is some hope that the Fed's move can restore the stability of the financial system," said Ernie Hon, a strategist at ICEA Securities in Hong Kong. "But over the longer-term, I think the (Hong Kong) market will continue its downtrend."



Japan's Nikkei 225 index closed 1.6 percent higher at 12,861.13 after rising as much as 3.2 percent. Hong Kong's Hang Seng index pared gains to close 1.9 percent higher at 23,422.76.

Markets in Australia, South Korea, Malaysia and Taiwan also rose, while China's key index fell to a seven-month low.

U.S. stock index futures were down slightly, suggesting that Wall Street would open lower Wednesday a day after the Dow Jones industrial average surged 416.66, or 3.55 percent, to 12,156.81. That was it's biggest one-day point gain since July 2002.

That surge was spurred by news Tuesday that the Fed — acting in concert with the European Central Bank, the Bank of Canada and the Swiss National Bank — agreed to loan investment banks $200 billion in exchange for debt, including slumping mortgage-backed securities.

The move was meant to essentially create a market for assets that investors have been too scared to buy. That freeze-up in demand had sent asset values plunging and caused huge losses for some of the world's biggest banks.

In Tokyo trading, the biggest gainers were financial shares, including Mizuho Financial Group, which rose 4 percent. Real estate company Sumitomo Realty & Development advanced 4.4 percent.

But traders in Tokyo and Hong Kong believed the rally in their markets was only temporary.

"Consumption in the U.S. is still weak," said ICEA's Hon. "April will still be bad (for Hong Kong stocks), but after that it might get better," partly due to an expected rise in investor sentiment ahead of the Beijing Olympics in August.

In Australia, the market finished below its intraday highs, with the benchmark S&P/ASX 200 rising 2.4 percent to 5,257.9.

In South Korea, too, shares trimmed gains as some technology stocks turned lower and airline stocks fell. The Kospi index climbed 1.1 percent to 1,658.83.

Chinese stocks fell to their lowest level in more than seven months, reversing early gains as renewed worries over moves to combat inflation overshadowed Wall Street's overnight rally. The Shanghai Composite Index lost 2.3 percent, or 95.76 points, to close at 4,070.12, after opening 2.1 percent higher.

The release Tuesday of data showing that China's key inflation index jumped 8.7 percent in February reinforced fears that authorities will raise tighten interest rates or otherwise tighten credit, analysts said.

Hours before New York trading resumed Wednesday, Dow futures were down 12 points, or 0.1 percent, at 12,178, while Standard & Poor's 500 futures were down 1.2 points, or 0.1 percent, at 1,322.7.

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