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Asian stock markets rally after Federal Reserve pledges aggressive steps to help US economy

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BANGKOK - Asian stock markets bounded upward Friday after investors got just what they wanted — hard-hitting steps by the Federal Reserve to help the U.S. economy out of its funk.

The Dow Jones industrial average cleared 13,500 for the first time since the beginning of the Great Recession after the Fed said Thursday it would buy $40 billion of mortgage securities a month until the economy improves. It also pledged to extend super-low interest rates into 2015.

Wall Street rallied on the news, and the enthusiasm spilled over into Asia. Hong Kong's Hang Seng jumped 2.4 per cent to hit a morning high of 20,550.28, a level it hasn't seen since early May.

Japan's Nikkei 225 index rose 1.5 per cent to 9,131.09 and South Korea's Kospi gained 2.4 per cent to 1,997.83. Australia's S&P/ASX 200 added 1 per cent to 4,384.20. Benchmarks in Singapore, Taiwan and mainland China also rose.

"The Committee is trying to convey to financial market participants that they can count on low interest rates and accommodative monetary policy for a long time and not to expect a reversal of policy in reaction to modest improvement if GDP growth or in the unemployment rate," analysts at HSBC Global Research said in a commentary.

On Wall Street, the Dow Jones industrial average rose 1.6 per cent to close at 13,539.86. The Standard & Poor's 500 index rose 1.6 per cent to 1,459.99. The Nasdaq composite index increased 1.3 per cent to 3,155.83.

Benchmark oil added 53 cents to $98.84 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.30 end at $98.31 per barrel on the Nymex on Wednesday.

In currencies, the euro rose to $1.3007 from $1.2985 late Thursday in New York. The dollar rose to 77.55 yen from 77.45 yen.

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