Japanese stocks rebounded 5.32 per cent yesterday, igniting a rare region-wide rally, as the yen advanced to a four-month high above 132 to the US dollar in Tokyo. The yen closed at 131.98 to the dollar in Tokyo. The Nikkei-225 Index, which tumbled 218.33 points on Friday, bounced back a whopping 747.15 points to finish at the day's high of 14,790.06. Brokers said the resurgent yen and book-squaring by pension funds inspired the strongest one-day rally in nine months. The Japanese market's gains contributed to a regional rally. Singapore stocks were up 7.08 per cent, Thailand's surged 6.39 per cent, and the South Korean market finished 3.92 per cent higher. The biggest surge was seen in Malaysia where the Composite Index rallied 22.45 per cent, despite last week's new capital controls and the sacking of deputy prime minister and finance minister Anwar Ibrahim. The Kuala Lumpur Stock Exchange has now risen more than 70 per cent in a week since Prime Minister Mahathir Mohamad launched the country on a new macroeconomic path. Analysts were unconvinced about the gains. ANZ Investment Bank regional markets analyst Zhong Yiru said: 'Sentiments are still very jittery.' Daiwa Securities regional strategist Peter Perkins said: 'I can't see this being sustainable. We are not seeing any evidence of a change in sentiments towards emerging markets, nor the economic fundamentals of Asia.' The impact of the yen's rise on other Asian currencies yesterday was significantly more muted. Standard Chartered Bank regional treasury analyst Andrew Fung said: 'They are not responding to yen strength because there is very little reason to be bullish on these currencies. 'Foreign investors aren't coming in. Emerging market sentiments right around the world are negative.' While the Malaysian stock market's rally was driven by a host of domestic stimulative measures, stock market sentiments in the rest of the region were being guided by events in Japan and the United States, brokers said. In New York on Friday, Federal Reserve chairman Alan Greenspan said the United States central bank was now as inclined to cut interest rates as to raise them. Any cut in interest rates would boost the US economy, which East Asian nations are dependent on to try to export their ways out of the region-wide economic slump. The US dollar's weakness and yen's strength was also greeted in the region as positive news. Finance ministry official Eisuke Sakakibara said Japan and the US had been concerned about 'excessive' yen weakness. 'I think the correction of the yen's weakness has just begun,' said Mr Sakakibara, a vice-finance minister for international affairs. Singapore blue chips were boosted yesterday by the start of futures trading based on the Morgan Stanley Capital International (MSCI) Singapore index. Singapore was also seen gaining from foreign funds shifting from Malaysia.