Mega deals boost Asian stocks

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Stock markets in Tokyo, Hong Kong, Seoul and Taiwan rose between 2 and 4 percent while Shanghai climbed 8 percent - its biggest daily gain since June 2005 - as the government approved the launch of two stock funds by domestic mutual fund firms in an apparent bid to prevent the local stock market from sliding further.

Shanghai's market is down 12 percent so far this year.

European markets were seen notching up gains, with financial bookmakers in London forecasting the FTSE 100, Germany's Dax and France's CAC-40 to open between 0.4-0.7 percent higher.

But Japanese government bond futures fell more than half a point as a 2.7 percent jump in Tokyo's Nikkei weakened appetite for safe-haven debt.

Crude oil drifted lower to around $88.785 a barrel in Asian trade, adding to a 3 percent drop on Friday, after President George W. Bush's gloomy assessment of the U.S. economy and weak employment data stoked recession fears.

Stocks shrugged off the economic news, taking the huge M&A deals as a sign that there was more value in some stocks than had been thought. Stock markets around the world have taken a beating this year on fears that a U.S. slowdown and a credit crunch would hit company earnings and bring large takeover deals to a halt.

"People were getting sceptical about big deals due to a spreading credit market crunch, so a possible M&A of top global companies is helping shore up investor confidence," said Kim Joong-hyun, an analyst at Goodmorning Shinhan Securities in Seoul.

MSCI's All Country index, which was up 0.4 percent by 0603 GMT, is still down more than 6 percent this year.

MSCI's measure of Asian stocks excluding Japan rose 2.3 percent.

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