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Asian Stocks Tumble Following Wall Street Plunge [UPDATED]

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ASIAN STOCKS
A man walks by an electric panel showing the latest Nikkei stock index in Tokyo Tuesday morning, Aug. 9, 2011. (AP Photo/Hiro Komae) | AP

BANGKOK — Asian stock markets jumped Wednesday following a surge on Wall Street prompted by an unprecedented pledge from the Federal Reserve to keep interest rates super low for the next two years to help the ailing U.S. economy.

Oil prices rose to more than $81 a barrel, while the dollar slid against the yen and the euro.

The Dow Jones industrial average finished Tuesday with a 429-point gain after the Fed pledged to keep its key interest rate at its record low of nearly zero through the middle of 2013. The index dived 634.76 points the day before after Standard and Poor's cut the U.S. government's credit rating, sending shock waves through global markets.

The U.S. central bank also said it discussed "the range of policy tools" it can use to spur the economy.

Martin Lakos, director of Sydney-based stockbroker Macquarie Private Wealth, said the Fed announcement was key to restoring some stability to the markets.

"Clearly yesterday there were rumors, speculation – whatever you like – the Federal Reserve would in fact come out with a positive announcement and that's clearly what they've done," Lakos told Australian Broadcasting Corp. television.

Japan's Nikkei 225 index climbed 1.2 percent to 9,047.05 and Hong Kong's Hang Seng jumped 3.7 percent to 20,042.81. Australia's S&P/ASX 200 index rose 3.1 percent to 4,160.00.

Indexes in Taiwan, the Philippines and mainland China were also higher.

South Korea's Kospi, which at one point Tuesday plummeted nearly 10 percent, gained 1.8 percent to 1,832.98. Samsung Electronics, the top global manufacturer of flat screen televisions, memory chips and liquid crystal displays, gained 1.8 percent.

Gains were broad-based, with banking shares among the key movers. Australia's Westpac Banking Corp. was 4.7 percent higher and National Australia Bank Ltd. gained 5.9 percent. Bank of China rose 4 percent. Industrial and Commercial Bank of China, the world's biggest bank by market value, gained 3.2 percent.

Airline stocks, which benefit from lower fuel costs, were also sharply higher. Hong Kong-listed Air China climbed 4.4 percent. South Korea's Asiana Airlines climbed 3.2 percent, and Taiwan's EVA Airways Corp. soared 6.4 percent.

Crude has fallen about 30 percent since reaching nearly $115 in May.

Worries about the U.S. economic recovery have been building since the government said that economic growth was far weaker in the first half of 2011 than economists expected.

In a reversal of earlier forecasts, economists now believe there is a greater chance of another U.S. recession because the economy grew much more slowly in the first half of 2011 than previously thought.

The manufacturing and services industries barely grew in July. The unemployment rate remains above 9 percent, despite the 154,000 jobs added in the private sector in July.

Economies across the globe are also struggling.

Worries are growing that Spain or Italy could become the next European country to be unable to repay its debt. High inflation in less-developed countries, which have been the world's main economic engine through the recovery, is another concern. China's inflation rose to a 37-month high in July.

Benchmark oil for September delivery was up $2.06 to $81.36 a barrel in electronic trading on the New York Mercantile Exchange. In London, Brent crude was up $2.79 to $105.39 per barrel on the ICE Futures exchange.

The dollar sank to 76.87 yen from 77.01 yen late Tuesday in New York. The euro strengthened to $1.4356 from $1.4222.

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Associated Press Writer Rod McGuirk contributed from Canberra, Australia.

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