ASIA MARKETS: Asian Banks Lead Gains Ahead Of Geithner's Plan

By V. Phani Kumar

Asian banking and financial shares were mostly higher Monday as investors awaited the release of a U.S. plan to stabilize the financial system, although hopes were laced with concerns that market intervention by Washington could spark inflation.

The advance extended the market's strong performance last week, and as investors await U.S. Treasury Secretary Timothy Geithner's briefing to unveil details of the new plan, scheduled for 8:45 a.m. Eastern time.

A Wall Street Journal report late Sunday cited U.S. Treasury Secretary Timothy Geithner as saying that the only way to resolve the financial crisis was to work with the private sector to remove troubled assets clogging banks' balance sheets.

Robert Howe, who heads Hong Kong investment firm Geomatrix, said that markets were upbeat on the general outline of the plan and its potential to remove the overhang on the financial sector, but cautioned there was little confidence in how long-lasting the advance would prove.

"We don't know if it's a bear-market bounce," Howe said.

Others market watchers said attention would shift to the details of the rescue plan, such as the mechanisms by which toxic assets would be removed from bank's balance sheets, how much it would cost, and who would pay for it.

"Given the fairly bad publicity Geithner has got as to the absence of details, I think the market will be fairly keen to watch his hands and not his lips," said BNP Paribas Wealth Management's senior Asia strategist Andrew Ferris.

In Tokyo, shares of Sumitomo Mitsui Financial Group (SMFJY) jumped 7.3% in afternoon trading, while Mitsubishi UFJ Financial Group (MTU) shares gained 5.5%, and Mizuho Financial Group .

Elsewhere around the region, National Australia Bank's shares added 3.4%, and Commonwealth Bank of Australia's were up 2.4%, and KB Financial Group added 4.3%.

The gains in Japanese shares came despite a record-low business sentiment survey released by the Japanese government Monday.

But despite anticipation over Geithner's impending announcement, some market players saw the event as only a secondary cue.

Francis Lun, a general manager at Fulbright Securities in Hong Kong, said that while Geithner's plan might influence Wall Street in a big way, Asian markets were still more worried about the impact of the Federal Reserve's separate plan to buy longer-dated U.S. Treasurys.

"Markets will be more concerned that [Fed Chairman Ben] Bernanke is introducing another $300 billion to buy longer-term debt, thereby increasing money supply and increasing the risk of inflation," Lun said.

Most Asian currencies rebounded strongly against the U.S. dollar last week after Bernanke detailed plans to buy the longer-dated U.S. debt, with the greenback's weakness also spurring sharp gains in crude-oil and gold prices.

In Monday's action, the U.S. dollar remained relatively stable against the yen, buying 96.07 yen, compared to its previous close of 95.95.

In the broader markets, the Nikkei 225 Average was up 2.6% at 8,154.32 in afternoon trade, while Australia's S&P/ASX 200 gained 2.3%. Hong Kong's Hang Seng Index added 3%, China's Shanghai Composite climbed 1.2%% and Singapore's Straits Times Index gained 2.1%.

May crude-oil futures were at $52.63 a barrel in electronic trading, up 56 cents from their finish on the New York Mercantile Exchange. April gold futures, meanwhile, slipped $4.60 to $951.60. The contract dropped $2.60 on the Nymex Friday, after rising nearly 8% in the previous session.