Wall St. Gains as Japan Leads Asian Markets

Asian stocks rallied sharply Wednesday as Tokyo’s rebound gained steam, and that helped give Wall Street a lift as well.

The Nikkei-225 stock index, which zoomed 3% on Tuesday on optimism that Japan is serious about fixing its banking system, soared another 532.62 points, or 3.4%, to 16,362.89 on Wednesday, the highest since April 10.

Early today the Nikkei was up again, rising 2% in morning trading.

On Wall Street on Wednesday, blue-chip stocks started the third quarter with a strong rally that pushed the Standard & Poor’s 500 index up 14.72 points, or 1.3%, to a record 1,148.56.

The Dow industrials rose 96.65 points, or 1.1%, to 9,048.67, still shy of the recent peak of 9,211.84.

Today, Japan is expected to unveil a proposal to clean up problem bank loans. Also, Prime Minister Ryutaro Hashimoto said the government will soon begin discussion of income tax cuts, the Jiji Press reported.

A stronger Japanese economy would help pull other Asian countries out of their economic crisis, improving prospects for American exporters as well, analysts noted.

In Asia on Wednesday, the South Korean stock market soared 5.9%, while Singapore gained 2.7% and Malaysia rose 3.4%. Other markets were closed for a holiday. But early today, the Hong Kong market started the day up 3.9%.

U.S. companies with significant stakes in Asia--especially financial firms--led Wall Street higher Wednesday. Citicorp, for example, surged $6.50 to $155.75. Merrill Lynch leaped $3.88 to $96.13.

Reflecting lessened concern about Japan’s economy, the yen continued to strengthen, sending the dollar down to 138.07 yen in New York, off 1.09 yen.

Meanwhile, the U.S. bond market continued to tread water, with yields ending mostly unchanged. As expected, the Federal Reserve Board ended a two-day meeting without altering interest rates.

In the stock market, smaller issues continued to lag bigger stocks, as some technology stocks were hammered by their warnings about disappointing near-term earnings.

The S&P; small-cap index was up 0.7% to 192.91, about half the blue chips’ percentage gain.

Overall, winners barely edged losers on Nasdaq, while winners beat losers by more than 2 to 1 on the New York Stock Exchange in continued heavy trading.

Among Wednesday’s highlights:

* Blue chips up sharply included Boeing, up $2.88 to $47.44; DuPont, up $2.31 to $77; and McDonald’s, up $2.25 to $71.25.

* Financial issues surging included NationsBank, up $3.25 to $79.94; Lehman Bros., up $2.25 to $79.81; and Charles Schwab, up $2.13 to $34.75.

But Hambrecht & Quist, up sharply Tuesday on renewed takeover speculation, fell $2.31 to $34.

* On the downside, stocks falling after earnings warnings included Parametric Technology, down $2.31 to $24.81, and Advanced Fibre Communications, down a stunning $20.94 to $19.13.

* Internet stocks, one of this year’s hottest sectors, soared anew on speculation that AT&T;, America Online, CBS and others are shopping for Internet partners.

Netscape Communications rocketed $8.63 to $35.69, DoubleClick jumped $14.31 to $64, Yahoo gained $12.38 to $169.88 and EarthLink Network rose $10.25 to $87.

* Nike gained $3.38 to $52.06 after the world’s largest footwear company reported a fourth-quarter profit of 4 cents a share, a penny ahead of estimates.

In Latin American trading, Mexican, Brazilian and Argentine shares soared, reacting in part to the turnaround in key Asian markets. Mexico’s main index gained 3.3% to 4,422.