ASIAN stocks rebounded on speculation the Federal Reserve will cut United States interest rates to bolster growth and after brokerages raised their ratings on Toyota Motor Corp and Isuzu Motors Ltd.

PetroChina Co and Macarthur Coal Ltd climbed on higher oil and coal prices. Fanuc Ltd, the world's largest maker of industrial robots, and Samsung Engineering Co rose after posting higher profits. The MSCI Asia Pacific Index added 1.4 percent, still set for its worst month since September 2001, Bloomberg News said.

"There will be companies in Asia that will surprise by being able to deliver growth that markets have not expected," said Kathryn Matthews, chief investment officer for Asia at Fidelity Investments, which has about US$1.5 trillion in global assets.

HSBC Holdings Plc and Sun Hung Kai Properties Ltd paced gains in Hong Kong, where interest rates track those of the US. The city's Hang Seng Index climbed one percent. Japan's Nikkei 225 Stock Average added three percent to 13,478.86.

MSCI's Asia Pacific index rose to 143.54 as of 6:19pm in Tokyo, with all 10 of its industry groups gaining. National Australia Bank Ltd led declines in Australia after business confidence dropped to a two-year low. Other markets in the region advanced except New Zealand.

The US Standard & Poor's 500 Index added 1.8 percent on Monday. Bank of America Corp led financial shares higher on expectations reduced borrowing costs will boost profits.

Traders see an 86 percent chance the Fed will cut its benchmark lending rate by 0.5 percentage point at its policy meeting today, according to Fed funds futures. That's up from 70 percent last Friday. Lower interest rates may help stave off a recession in the US economy, Asia's largest export market.

The Fed is "singing to the tune of what the markets want, which is a 50 basis point cut," said Pankaj Kumar, who manages about US$460 million as chief investment officer at Kurnia Insurans Bhd in Petaling Jaya, near Kuala Lumpur. Such a cut will "provide a relief rally for the markets."

Toyota, the world's largest auto maker by value, added 1.3 percent to 5,500 yen (US$51.19). Seiji Sugiura, an analyst at HSBC Holdings Plc in Tokyo, lifted his recommendation on the shares to "neutral" from "underweight," saying there is "little risk of a serious downturn in the US auto market."

Isuzu Motors, the largest Japanese maker of light-duty trucks, climbed 9.6 percent to 433 yen after Goldman Sachs & Co upgraded the stock to "buy" from "neutral."