Asian markets recover from their lows

Asian markets recovered from their early shocks and majority of them managed to post decent gains. Japanese shares reversed losses to close higher despite a major defeat for the nation's ruling party in Sunday's parliamentary elections. The indexes fell earlier on reports that the LDP won 37 of the 121 seats in the Upper House of the Diet that were contested. The main opposition party, the Democratic Party of Japan, or DPJ, won 60 seats. The result elevates the DPJ into the chamber's single largest party and means it can take the house's powerful chairman post, as well as the chairmanships of major committees such as budget and house steering.

The Nikkei 225 index ended 0.03% higher at 17,289.30, after touching an intraday low of 17,042.66 earlier in the session. The broader Topix index rose 0.4% to 1,705.71. The Japanese reversal was because 'the economic fundamentals are intact and corporate-earnings growth [so far] during the first quarter has been above expectations,' analsysts said.

Chinese shares ended at a record as the Shanghai Composite ended at 4440.7, up 95.41 points or 2.20%. Other regional markets also gained, with Hong Kong's Hang Seng Index adding 0.8% to 22,739.90, recovering part of its losses Friday. The Chinese markets have been on a dream run and they are not worried about the events in US. They have the money, and expectation of strong corporate earnings is a driver for the stocks, local analysts say.

Elsewhere in Asia, South Korea's Kospi rose 1.25% to 1,906.71, Taiwan's Weighted index lost 1% to 9,072.57, while the Singapore's Straits Times Index rose 0.96% to 3,526.29. The dollar was quoted at 118.90 yen in Tokyo late Monday afternoon, compared with 118.79 yen late Friday, when it rallied against major currencies as investors fled riskier assets funded by cheap borrowing in the Japanese currency.

Meanwhile European stocks have opened up slightly despite dips in early trade as gains in miners and chemicals group ICI failed to offset the impact of fears that a credit crunch would hurt mergers and acquisitions. Frankfurt's DAX was up 0.15%, but worries over the troubled US sub prime mortgage market lurked in the background, with German industrial bank IKB issuing a profit warning and losing its chief executive over sub prime problems at a major fund it managed. IKB shares tumbled 17%. In London, the FTSE 100 index was up 0.14%, and the CAC was up 0.26% in Paris.

Asian markets had sunk Friday in reaction to a sharp decline on Wall Street amid worries that problems in the US subprime mortgage market could drag on US economic growth and cause investors to pull out of riskier assets. Rising mortgage rates and defaults this year have hurt mortgage lenders in the US, particularly sub prime lenders that lend to borrowers with less than perfect credit scores. So far, more than 50 lenders have filed for bankruptcy or sold themselves.

Wall Street slumped again Friday despite figures that showed a surprise rebound in U.S. economic growth during the second quarter. The Dow Jones industrial average slid 1.5%, bringing the index's decline for the week to 4.2% the largest percentage drop since late March 2003. European markets also fell Thursday and Friday, although the losses Friday were smaller.

Some of those concerns subsided Monday as investors bought up stocks that appeared oversold as they began to conclude that worries fallout from US mortgage market ills may have been overdone, analysts said. The markets' recoveries reflect a measure of confidence that regional and global growth will remain strong, analysts said.