TOKYO (Reuters) - The Nikkei stock average surged more than 12 percent on Tuesday, making up for its worst one-day loss since the 1987 stock market crash after international government pledges to pour cash into struggling banks and restore confidence in the global financial system.
The NIKKEI (NIKKEI225.)s surge, which saw it rise more than 1,000 points within the first hour of trade, more than wiped out its Friday losses, when it fell 9.6 percent. Shares of Mitsubishi UFJ Financial Group <8306.T> were untraded on Tuesday, with a flood of buy orders lined up at the stock's daily limit-high, after Japan's top bank delivered on a planned $9 billion investment in U.S. firm Morgan Stanley
"We're seeing both short-covering and a lot of fresh buys," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities, adding that he expected the Nikkei to rise still more.
"Basically, the market fell too far last week. I'd say 9,600 isn't that difficult a short-term goal."
But rises beyond that are likely to be difficult as worries about the global economy remain, and there are also some doubts about the U.S. government's agreement to take stakes in several big banks, he added.
The U.S. government agreed on Monday to take $25 billion stakes in several big banks to shore up the banking system and arrest the financial crisis.
The move follows pledges by the governments of Britain, Germany, France and other European countries of more than 1 trillion euros ($1.36 trillion) to bolster their own banks.
"First, the actual amount (of the U.S. plan) is still a little small, and most of the banks will have to raise $10 billion in matching capital. There's some question about whether they'll be able to do this," Yamagishi said.
Honda Motor Co <7267.T> soared 18.5 percent to 2,495 yen, and other exporters also forged upwards as the dollar gained against the yen, rising to 102.72 yen by 9:03 p.m. EDT.
Shares of MUFG were flooded with buy orders at 810 yen, up by their daily limit of 100 yen, or 14 percent. No. 3 bank Sumitomo Mitsui Financial Group <8316.T> surged 15.6 percent to 637,000 yen.
(Reporting by Elaine Lies; Editing by Hugh Lawson)
