Asian banks slash interest rates

South Korea, Taiwan and Hong Kong joined central banks around the world on Thursday in cutting interest rates to combat the global financial crisis.

Despite the move, Asian markets were mixed on Thursday as fears over the severe strains in credit markets and the prospect of a global recession continued.

Lower interest rates won't cure the crisis in confidence, analysts told the Associated Press.

"Short-term selling pressure is still strong," said Lorraine Tan, director at Standard & Poor's equity research in Singapore. "I don't think interest rate cuts alone are going to help improve confidence all that much."

Asia's rate reductions were made following a similar move on Wednesday by the U.S. Federal Reserve, the Bank of Canada, the European Central Bank and China's central bank.

The lower rates are an effort to contain the spreading financial crisis.

"The co-ordinated rate cuts by global central banks is unprecedented and that reflected the seriousness of the financial crisis of this century," said HKMA chief executive Joseph Yam.

The Bank of Korea cut its key seven-day repurchase rate to five per cent. It was the bank's first rate cut since November 2004.

Taiwan's Central Bank cut its key interest rate for the second time in two weeks to 3.25 per cent on its 10-day loan rate.

"Our economy has come under pressure for a slowdown," said Taiwan Gov. Perng Fai-nan. "We hope the rate cut can stimulate consumption to spur economic growth."

Tokyo's benchmark Nikkei 225 index rose more than one per cent in early trading on Thursday but was down 0.5 per cent to 9,157.49, a five-year low, by close.

Hong Kong's Hang Seng index was up 2.1 per cent in late afternoon trading at 15,779, and South Korea's key index closed up 0.6 per cent.

Mainland China's main index fell 0.8 per cent.

In Indonesia, trading on the Jakarta Stock Exchange was cancelled Thursday after the benchmark JSX index sank 10.4 per cent Wednesday. Authorities ordered the market to stay closed, possibly through Friday.

With files from the Associated Press

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