HONG KONG (MarketWatch) -- Japanese stocks soared Tuesday, rebounding from last week's multi-year lows, with the benchmark Nikkei 225 Average climbing a record 14.2% on a broad-based rally after U.S. indexes posted a double-digit surge overnight.

Other Asian markets jumped as well, as governments around the world unveiled plans worth hundreds of billions of dollars to rescue banks as part of their efforts to find a solution to a financial crisis that has weighed on global markets for more than a year.

"The latest round of the crisis has come to an end," said Steven Leung, director at UOB Kay Hian. "But if you look at the inter-bank rates, they're still at high levels, so confidence is returning but at a slow pace. I think that's quite normal after the panic we had last week."

The Nikkei 225 Average shot up 1,171.14 points, or 14.2%, to 9,447.57, posting its biggest percentage gain on record, according to wire reports. The rebound came after the benchmark lost 24% of its value last week, including 9.6% on Friday, to end at its lowest level since May 2003. The broader Topix index, meanwhile, rose 13.7% to 956.30.

Uwe Parpart, chief economist and Asia strategist at Cantor Fitzgerald Asia, wrote in a note that the stock rallies in the U.S., Europe and Japan "were large and convincing enough to point to some near-term market upside," but the markets still "have to come to grips with deepening global recession, declining earnings and increasing corporate defaults."

"I don't believe markets bottomed last Friday. The market panic may have been stopped. But the bear market will continue through much of 2009," Parpart added.

Hong Kong's Hang Seng Index ended up 3.2% at 16,832.88, a day after it surged 10.2%. The Hang Seng China Enterprises Index advanced 4.4% to 8,435.46.

China's Shanghai Composite dropped 2.7% to 2,017.32, reversing early gains, as investors disappointed that the government didn't announce more measures to support the stock market sold off toward the close. Singapore's Straits Times Index climbed 4% to 2,159.24 by late afternoon, Taiwan's Taiex ended 5.4% up at 5,291.56 and Thailand's SET index jumped 5.8% to 503.75.

India's Sensitive Index, or Sensex, added 2.5% to 11,591.22, after advancing 7.4% in the previous session. Australia's S&P/ASX 200 gained 3.7% to 4,335.20 and South Korea's Kospi added 6.1% to 1,367.69, while New Zealand's NZX 50 index rose 6% to 2,948.97.

The gains in Sydney came after the Australian government unveiled a surprise A$10.4 billion ($7.4 billion) stimulus package earlier in the day, designed to bolster the economy in the face of what Prime Minister Kevin Rudd described as the greatest financial crisis since the Great Depression. See full story.

"This type of rally can sometimes be misleading, but at the end of the day, it's also a major relief" after the steep sell-offs in the recent past, said Lucinda Chan, a division director at Macquarie Research in Sydney, referring to the moves announced by the Australian and other governments.

"The key issue here is to maintain a strong financial system and that's what the package is trying to do -- to bring the trust and faith back," she added.

Economic downgrade

In spite of the day's steep gains, worries about the impact of a global economic slowdown on Asia remained.

In a note released Tuesday, Citigoup analyst Yiping Huang cut the 2009 gross domestic product estimate for Asia, excluding Japan, to 6.3% from 7.2% earlier. The brokerage lowered the 2009 GDP growth estimate for China to 8.8% from 9.4%, for India to 6.6% from 7.4% and for South Korea to 2.2% from 3.4%. It also predicted Singapore's 2009 GDP would shrink 1.2%, as compared to its previous estimate of a growth of 2.5%. It lowered Hong Kong's growth estimate to 2.8% from 3.8%.

"Expectations of a more severe recession in the U.S. has prompted further cuts to Asian GDP forecasts," wrote Yiping.

"Economies with larger domestic markets and greater policy flexibility, such as China and India, should grow faster. But economies relying more on external financing or capital inflows, such as Korea, Vietnam and Indonesia, are more exposed to liquidity risks," Yiping added.

Regional detail

Financials rallied across the region, with shares of Nomura Holdings Inc. (8604) NMR, -2.87% jumping 16.3% and Sumitomo Mitsui Financial Group (8316) SMFJY climbing 16.9% in Tokyo. In Sydney, National Australia Bank (NAB) NABZY, -1.52% jumped 7.3% , while Macquarie Group (MQG) jumped 12.2%.

In Hong Kong, Industrial & Commercial Bank of China (1398) added 3%, KB Financial Group Inc. KB, -2.90% soared 3.9% in Seoul, DBS Group Holdings DBSDY, -1.91% rose 3% in Singapore and ICICI Bank IBN, +0.30% added 6.5% in Mumbai.

Shares of Mitsubishi UFJ Financial Group (8306) MTU, advanced 14.1%, after the banking giant wrapped up a revised deal with Morgan Stanley MS, -2.35% , taking a 21% stake in the U.S. bank for $9 billion. See full story.

Among other notable gainers in Tokyo, Toyota Motor Corp. TM, -1.29% (7203) rose 15.5% and Sony Corp. (6758) SNE, +0.25% jumped 16.8% among exporters, Nippon Steel Corp. (5401) NISTY gained 24.2%, commodities trader Marubeni Corp. (5401) MARUY, -0.92% rallied 20.2% and machinery maker Komatsu (8267) KMTUY, -1.85% added 16.5%.

Elsewhere, STX Shipbuilding shares gained 14.9% in Seoul, property major China Vanke Co. CVKEF gained 1.9% in Shenzhen, DLF gained 6.6% in Mumbai and CapitaLand CLLDY, -0.82% shares rose 8.1% in Singapore.

The surge came after European authorities Monday led the way in unveiling plans to recapitalize banks, with Britain announcing details of its 37 billion pound ($63 billion) plan to inject capital into troubled lenders. See full story.

U.S. officials, separately, were putting finishing touches on Washington's version of a rescue package and announced they would unveil it before the U.S. markets opened Tuesday. See full story

Stocks soared on Wall Street on international government actions, with the Dow Jones Industrial Average DJIA, -0.47% surging 936.42 points, or 11.1%, to 9,387.61, to register its biggest daily point jump on record. The Nasdaq Composite $COMPX surged 11.8% to 1,844.25 and the S&P 500 index SPX, -0.48% rose 11.6% to 1,003.32. See full story.

In Asian currency trading, the U.S. dollar jumped to 102.29 yen recently, compared with 100.80 yen late Monday.

November crude-oil futures rallied as much as $2.22 to $83.41 a barrel in electronic trading, after advancing $3.49 to settle at $81.19 a barrel Monday on the New York Mercantile Exchange.