Markets in Hong Kong and mainland China drew encouragement from a speech by outgoing Premier Wen Jiabao and presentation of the country's budget at the opening of the annual National People's Congress, a ceremonial legislature.

Wen promised deficit spending to meet a growth target this year of 7.5 percent that is enshrined in the ruling Communist Party's latest five-year development plan. Wen mentioned subsidies for agriculture and energy conservation and said the country was committed to fighting corruption and improving the environment. Wen also pledged to relax the credit supply, analysts said.

"I think that is good news for the banks. Either they will increase their quota for new loans or reduce the deposit reserve ratio. So that means boosting the money supply to support economic growth," said Francis Lun, managing director of Lyncean Holdings in Hong Kong.

Lun also said he believes China's leaders are aiming for something higher than the 7.5 percent growth target announced at the congress.

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Developments elsewhere were more muted -- an indication that investors think the costs facing Japan may not spill over significantly. In Europe, sentiment was partly supported by the weekend agreement of a broad package of measures to ease the government debt crisis that has already forced Greece and Ireland into seeking bailouts.

However, most attention was centered on Japan, and how the world's third-largest economy is dealing with the catastrophic events of last Friday. Financially, the situation is made even more difficult by the fact that Japan's debt stands at around 200 percent of its national income and its economic recovery came to a grinding halt in the last three months of 2010.

The Bank of Japan was quick off the mark Monday, injecting a record 15 trillion yen ($183.8 billion) into money markets to try to defend the already fragile economy. By flooding the banking system with cash, the central bank hopes banks will continue lending money and meet the likely surge in demand for post-earthquake funds.

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