The New Nation - Internet Edition

AFP, Tokyo

Asian stock prices rebounded sharply today on growing hopes that the United States will step in to save its ailing Big Three automakers.

Japan's Nikkei index surged 5.21 percent, while Seoul's KOSPI index added 4.9 percent, after Washington suggested it would help Detroit by tapping into a 700 billion-dollar bailout initially aimed at the financial industry.

The announcement triggered surprise gains on Wall Street, reversing earlier weakness that sent global indexes into a collective tailspin. The Dow Jones Industrial Average gained 0.75 percent to close at 8,629.68 on Friday.

Hong Kong's Hang Seng index was up nearly three percent by late afternoon, although Shanghai pared early gains after China posted its slowest rise in industrial output in more than a decade.

Asian and European markets had plummetted Friday after the US Senate shot down a multibillion-dollar package to rescue automakers on the brink of bankruptcy as the global economy slows down.

"Tokyo plunged Friday out of fears that New York would tumble after the auto bailout bill was scrapped," said Ryoji Nagaoka, an investment information official at SMBC Friend Securities. "Since then, relief has spread after New York rallied," he said.

But Nagaoka said investors "do not expect the Big Three will get a bailout smoothly."

"If they had a bright outlook, the index would rise more than it fell on Friday. The rebound is still smaller than Friday's plunge."

US President George W. Bush said during a surprise trip to Afghanistan Monday that an agreement on how to remedy the carmakers' plight was not imminent.

"We are not quite ready," he told reporters travelling with him on Air Force One, but added: "This will not be a long process because of the urgency."