Asian stocks rally

Auto stocks were part of the broader rally on the Tokyo Stock Exchange Tuesday

TOKYO, Japan -- Japan and other stock markets around Asia rallied on Tuesday morning after Wall Street's retreat came within market expectations.

Terrorist attacks in the United States last week closed Wall Street for four days, and all eyes were on the markets as they resumed trading to see how investors would react to the uncertainty.

Before Wall Street opened, the U.S. Federal Reserve and the European Central Bank also helped by cutting interest rates in a bid to boost stocks, though brokers warned that investors will stay cautious despite government intervention.

At the end of the Tuesday morning session, the benchmark Nikkei 225 average was up 306.08 points or 3.22 percent to 9810.49.

The broader capital-weighted TOPIX index rose 25.16 points or 2.52 percent to 1,021.61.

Tech stocks such as Sony and Hitachi rose, as did mobile phone giant NTT DoCoMo, which put on 7.25 percent.

Australia, New Zealand rebound

Elsewhere in the region, the Australian and New Zealand markets also rebounded, gaining 1.65 and 2.39 percent respectively.

By noon in Australia, the S&P/ASX200 was up 48.7 points to 3004.0, led by gains among bluechip banks and media heavyweight News Corp.

The NZSE Top 40 was up 42.72 points to 1833.03. Air New Zealand regained a little ground, but its outlook remains far from certain.

In Seoul, the Kospi also made good gains, up 13.56 points or 2.9 percent to 482.32. Hynix Semiconductor jumped more than 13 percent, putting on 115 won to 965 won.

In Taiwan, the stock market was closed for the second straight day as the country tries to clean up following a devastating typhoon which struck the island Monday leaving up to 30 people dead.

In Hong Kong, the Hang Seng index also rose, putting on almost 2.5 percent in early trade to 9551, for a gain of 231.65 points.

Dow posts record fall, down 7 percent

In Japan, airline stocks such as Japan Airlines staged a brisk rebound on Wall Street's performance, despite the Dow Jones industrial average posting its biggest point drop ever.

The Dow finished at 8920, a drop of 684 points or 7 percent as U.S. stock markets resumed trading on Monday, nearly one week after terror attacks pulverized the World Trade Center.

Traders said, however, Tokyo's gains may be elusive given persistent worries over a further slowdown in the U.S. economy after last week's devastating attacks.

"The Wall Street tumble was pretty much within the range of our expectations. But Tokyo's gain could be just a one-time phenomenon," Toshihiko Matsuno, deputy general manager of investment advisory office at Sakura Friend Securities told Reuters news agency.

"There are serious worries consumer sentiment would deteriorate if possible U.S. military action lasts a long time,"

Reuters contributed to this report.