Asian stocks rally on U.S. stimulus hopes

Major indices in Japan, Australia, Hong Kong and South Korea rise on the possibility of a new plan to bolster the U.S. economy.

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NEW YORK (Fortune) -- Asian markets rose Tuesday following the Dow Jones' 413-point surge and talk in the United States of a new stimulus plan.

Japan's Nikkei index was in positive territory for the third day, rising 2.6%. Australia's All Ordinaries index also edged up 2.6%. Hong Kong's Hang Seng rose 2% and South Korea's KOSPI index gained 1.7%.

In the United States, the Dow jumped back above 9,000 Monday and finished up 4.6%. The S&P surged 4.8% while the Nasdaq rose 3.4%.

European markets also rallied Monday. London's FTSE-100 soared 5.4%, Paris's CAC-40 gained 3.6% and Frankfurt's DAX ended up 1.1% .

Investors cheered fresh signs that the combination of low interest rates and unprecedented steps by governments around the world to shore up banks with billions of dollars of new capital appears to be working.

Banks are lending more to each other and to companies - functions that are core to any working economy. While bank-to-bank interest rates are still high, they are lower than they have previously been.

Markets were also buoyed by a suggestion from Federal Reserve Chairman Ben Bernanke that a second U.S. stimulus package might be in order.

Analysts doubt that market volatility is over. In a speech Monday, Bernanke predicted the economy would be weak for several quarters and warned of a "protracted slowdown."

After the U.S. markets closed, American Express reported weaker profits that were better than expected while Texas Instruments missed analysts' estimates.

On Tuesday Dow components 3M (MMM, Fortune 500), Caterpillar (CAT, Fortune 500), DuPont (DD, Fortune 500) and Pfizer (PFE, Fortune 500) are due to report quarterly earnings. Among other companies scheduled to post earnings Tuesday are Apple (AAPL, Fortune 500), Yahoo and National City (NCC, Fortune 500). To top of page

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