By Tony Munroe
HONG KONG (Reuters) - Japan's commercial paper market shrank at its fastest pace in two years in November as the global credit crunch squeezed companies' access to debt, forcing them to turn to bank lending, while Australia doled out cash to keep its consumers spending.
In Washington, White House and congressional negotiators worked on Sunday to resolve differences in an emergency rescue package for the ailing "Big Three" U.S. automakers that would include at least $15 billion in loans.
The plan gained urgency after Friday's U.S. employment data showed more than half a million jobs were lost in November, while a report on Monday that Japanese rival Toyota Motor Corp was eyeing a sharp cut in capital spending showed how the industry downturn is engulfing all automakers.
Still, Asian stocks roared higher following a Friday rally on Wall Street and hopes that agreement was near on a package for the U.S. car industry. A spate of recent rate cuts and stimulus measures, and hopes that more are on the way, fueled buying.
The MSCI Index of Asia-Pacific stocks outside Japan jumped 6.3 percent on Monday to a three-week high, while Tokyo's main Nikkei index was up 5 percent.
Market talk that Beijing would take further steps to protect growth in the world's fastest-growing economy helped shares in Hong Kong. Oil also got a boost, rising nearly 5 percent to just below $43 after hitting a 4-year low last week.
"There is a lot of talk about support measures from China, including buying up more bank shares, a rescue package for the stock market and other steps to boost private consumption," said Peter Lai, director with DBS Vickers.
Dariusz Kowalczyk, chief investment strategist at CFC Seymour in Hong Kong, said U.S. stocks have become increasingly indifferent to the drumbeat of poor economic data.
"However, volatility is likely to continue and we believe that stock markets in Asia and Europe have much further to fall due to a more protracted recession there than in the U.S.," he wrote in a Monday note.
In Sydney, shares in Santos Ltd rose as much as 16 percent after a newspaper reported that China National Petroleum Corp (CNPC) was considering teaming up with a foreign company to make a bid for the Australian oil-and-gas firm.
The news followed reports on Friday that China's Yanzhou Coal Mining Co Ltd was eyeing a possible bid for Australian counterpart Felix Resources and showed that China's appetite for acquisitions of resources companies remains robust despite a plunge in commodities prices and slowing global demand.
JAPAN STRUGGLES
Japan's outstanding balance of commercial paper dropped 9.9 percent in November from a year earlier, its biggest fall in nearly two years, Bank of Japan data showed.
Failing to tap credit markets, companies turned to bank lending, which grew in November by 3.2 percent from a year earlier, its fastest pace on record, the central bank said.
While Japan escaped heavy exposure to the U.S. subprime mortgage meltdown, its export-dependent economy has been battered by the global credit crisis, and companies have been forced to turn to the country's huge banks for funding they would ordinarily secure in the commercial paper and bond markets.
"There was a conspicuous rise in lending by major banks, which means that even large companies that are considered blue chips are taking on more bank loans in the face of tighter conditions for direct financing," said Junko Nishioka, chief economist at RBS Securities.
Revised GDP data on Tuesday is expected to show that the Japanese economy shrank 0.2 percent in July-September, double the previously reported reading and confirming recession, according to a Reuters poll.
Data on Monday showed that the country's current account surplus fell by a more-than-expected 56.5 percent in October.
Also in Tokyo, the Nikkan Kogyo newspaper reported that Toyota, the world's largest auto maker, was considering cutting capital expenditure for the business year starting in April by 30-40 percent in response to the sharp downturn in car sales.
STIMULUS SPENDING
Australia's handout of cash to families and pensioners, part of a stimulus package unveiled in October, echoes a spate of plans by governments around the world aimed at bolstering spending to help economies recover.
"I've urged pensioners and families to spend this money responsibly, to use this money to make ends meet, to help out their kids and help out their grandkids," Prime Minister Kevin Rudd said on Monday.
"If the government doesn't empower consumers at a time like this, in the midst of global financial crisis, then in fact we will have even greater challenges ahead," he said.
On Sunday, India unveiled $4 billion of extra spending for its current fiscal year, a day after the country's central bank cut key interest rates by 1 percentage point.
U.S. President-elect Barack Obama, meanwhile, unveiled plans over the weekend for the largest U.S. infrastructure investment programme since the 1950s, which analysts said could top at least $500 billion.
(Additional reporting by Reuters bureaus worldwide; Editing by Lincoln Feast)
