Asian shares lifted by US growth revision

Asian markets rallied on Thursday, following big gains on Wall Street, as dealers took a downward revision of US economic growth as a sign the Federal Reserve will not reel in its stimulus programme any time soon.

Receding concerns about a liquidity crisis in China also provided some support, while the dollar and commodities also enjoyed gains as bargain-buyers moved in.

Tokyo added 1.92 percent by the break and Hong Kong was 1.57 percent higher, while Shanghai climbed 1.13 percent.

Seoul surged 2.43 percent following data showing South Korea had posted a record current account surplus in May.

And Sydney climbed 1.50 percent, although analysts said investors were not moved by news that Julia Gillard had been ousted as prime minister by Kevin Rudd, her predecessor. Rivkin global analyst Tim Radford said dealers were awaiting Rudd's communication on policy.

The gains came after the US Commerce Department slashed its estimate for first-quarter growth in the world's biggest economy from 2.4 percent to 1.8 percent.

The data raised the prospect that the Fed will sit tight on winding down its bond-buying scheme, known as quantitative easing (QE), as it waits for the economy to show more signs of strength.

Investors "now understand that the Fed is only going to pull back on its QE if the economy is continuing to improve," said Michael James, managing director of trading at Wedbush Morgan Securities.

"If we are not seeing economic improvement, the Fed is not going to remove their QE."

The Dow jumped 1.02 percent, the S&P 500 rose 0.96 percent and the Nasdaq added 0.85 percent.

Adding to the upbeat outlook, the European Central Bank said it would keep its own loose monetary policy in place for the foreseeable future as it tries to stoke growth in the recession-hit eurozone.

In China a cash squeeze that sent global markets tumbling this week showed signs of easing slightly on Thursday, with dealers saying there was more money being provided by better capitalised large state run banks.

The seven day rate of interbank borrowing dropped to 6.91 percent from 7.29 percent Wednesday's close and well down from the 11.62 seen last Thursday, soothing concerns that lending would freeze up and damage China's economy.

On forex markets the dollar held up after enjoying a rally on Wall Street. The unit bought 97.77 yen in early trade, against 97.82 yen late Wednesday in New York. That compares with the 97.45 yen earlier Wednesday in Asia.

The euro fetched $1.3022 and 127.20 yen compared with $1.3007 and 127.24 yen.

Oil prices rose, with New York's main contract, light sweet crude for delivery in August gaining three cents to $95.53 a barrel while Brent North Sea crude for August delivery was up 13 cents to $101.79 in morning trade.

Gold fetched $1,240.50 per ounce by 0230 GMT, from $1,229.13 late Wednesday.

-- Dow Jones Newswires contrbuted to this story --