Asian, European Stocks Rise on Rate Cut

A woman walks past a digital stock indicator in downtown Tokyo Wednesday, Sept. 19, 2007. Japanese stocks jumped Wednesday in the wake of Wall Street's overnight surge spurred by the U.S. Federal Reserve's bigger-than-expected interest rate cut. The benchmark Nikkei 225 stock index soared 500.22 points, or 3.17 percent, to 16,302.02 points on the Tokyo Stock Exchange in early afternoon trade after the Federal Reserve cut its benchmark interest rate by a larger-than-expected half percentage point overnight. (AP Photo/Koji Sasahara) (Koji Sasahara - AP)

The world's central banks like to show they are working together to maintain global stability, and the Bank of Japan would find it hard to raise rates at a time the U.S. central bank is cutting them.

Asian Development Bank President Haruhiko Kuroda said the U.S. rate cut will benefit Asia's emerging economies.

"It will definitely sustain the strong economic growth in the U.S., which is beneficial to emerging economies in Asia," he said in Manila at a news conference at a forum sponsored by the World Trade Organization.

Oil prices rose as well Wednesday as the rate cut lifted expectations growth will accelerate and increase demand for already tight crude and gasoline supplies.

Light, sweet crude for October delivery rose 64 cents to $82.15 a barrel on the New York Mercantile Exchange after hitting a new trading high of $82.51 earlier.

But higher oil prices could spur inflation just as the Fed is cutting rates, warned Jose Vistan, research head at AB Capital Securities in Manila.

"The Fed decision could backfire because we are in the midst of rising commodity prices, particularly energy, oil prices rising to record levels," he said.

For now, investors are relieved that the Fed acted to ease pressure in credit markets.

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Associated Press writers Teresa Cerojano in Manila, Kelly Olsen in Seoul and Yuri Kageyama in Tokyo and AP Business Writer Tim Paradis in New York contributed to this story.