JAPANESE stocks rebounded yesterday on news that the Government and opposition parties will meet to discuss a compromise on controversial political reform legislation. Passage of the laws would allow the Government to focus on reviving the economy. The news sent investors scrambling for stocks one day after the benchmark Nikkei 225 average fell five per cent on concern that Friday's defeat of a package of political reform bills in the upper house could bring down the Government and delay economic recovery. The Nikkei 225 average rose 295.12 points or 1.61 per cent to 18,648.36. Most of the gains came in the afternoon after the opposition Liberal Democratic Party agreed to participate in an ad-hoc committee with the governing coalition parties to negotiate a compromise on political reform. BANGKOK THE Stock Exchange of Thailand (SET) index dipped 13.99 points or 0.96 per cent in moderate trading to close at 1,447.6 points. A total of 130.5 million shares worth 18.8 billion baht changed hands. Declining stocks outnumbered advances 166 to 93, and 80 issues closed unchanged. One broker attributed the fall to short-term profit-taking following a rise on Monday of 53.13 points. The fall in other regional markets, such as Hong Kong, was also a factor, he said. BOMBAY HECTIC buying by foreign institutional investors throughout the session pushed up share prices in the Bombay stock market. The Bombay Stock Exchange 30-share index rose 123.52 points or 3.1 per cent to close at a provisional 3,978.96 points. The 100-share national index rose 55.22 points or 2.9 per cent to a provisional 1,888.85. ''Some of the bigger foreign investors were very active,'' said independent broker B.B. Shah. He said Reliance was the most heavily traded share, rising 8.50 rupees to 409.50. Another broker said Reliance and other market leaders were particularly supported by Morgan Stanley and Jardine Fleming. JAKARTA PRICES closed mixed in slow late trading, with overall volume shrinking on lacklustre trading. ''Although market may see further light correction, but profit-taking is diminishing as local players showed sign of bargain hunting,'' a Japanese brokerage dealer said. Sampoerna rose 700 rupiah to 13,100 on moderate volume. Brokers said news of higher cigarette sales had improved sentiment. KUALA LUMPUR PRICES tumbled over a broad front at the close partly due to forced selling activity, with the benchmark Kuala Lumpur Stock Exchange composite index falling 50.53 points or 4.75 per cent to 1,014.02. ''The market is lethargic and confused,'' said one dealer at SJ Securities. ''It will stay under pressure as a lot of people have been shaken.'' Brokers said investors were still unwinding overbought positions after a year-long bull run, although the index had already fallen more than 20 per cent from its record 1,332.04 earlier this month. Turnover was 250.6 million shares against 158.6 million on Monday. MANILA PRICES closed lower as most investors kept to the sidelines, awaiting for news on talks between the Government and the International Monetary Fund (IMF) as well as on an anticipated rise in oil prices. The Manila and Makati composite indices dropped about 23 points each as the market continued to consolidate. Brokers said they expected the market to rise slowly to a higher base. Manila ended at 3,089.44 points while Makati settled at 3,089.62. Market leader Philippine Long Distance Telephone Co was among the top losers, slipping to 2,270 pesos from 2,290. The combined volume dropped to 1.83 billion shares against the previous 2.66 billion while value fell to 1.15 billion pesos from 1.7 billion. SEOUL INVESTORS bargain-hunting in electricity monopoly KEPCO and some banking shares pushed the market to close higher for a third consecutive session. Brokers said profit-taking took a toll on some blue chips and low-priced counters continued to lose ground. The composite stock index added 4.1 points to 892.06. Despite the rise, losers outnumbered gainers 558 to 207 with 57 stocks remaining unchanged. ''The market gained momentum due to advances in heavily weighted shares,'' said Kim Dong-ik of Daishin Securities. ''I expect mixed trading for the time being. But banking issues considered too undervalued will sustain its rising momentum,'' said H.K. Kang of Schroders. Mr Kim predicted a steady rise in the market because of increasing customer deposits at brokerages. SINGAPORE PRICES resumed their steep declines on retail selling, with the key market index falling 2.68 per cent in jittery trade. The 30-share Straits Times Industrials index fell 62.22 points to 2,256.05 in what brokers said was largely a spillover from the plunging Malaysian stock market. ''Overall, a lot of people are hurt [in the Malaysian market], and pulling our market down as well,'' said T.K. Yap, head of sales at Peregrine Securities. SYDNEY THE market ended down, but off the day's lows, after a volatile session. The All Ordinaries Index closed 2.6 points lower at 2,221.9. The indicator fell around 19 points in early trade before climbing back to be 5.9 points up in a roller-coaster morning. A hangover from Monday's tumble on the Tokyo exchange and news of price cuts for Australia's coal exports to Japan dragged the local share market lower at the open. But brokers said better-than-expected consumer price index (CPI) data subsequently boosted shares. The CPI for the December quarter was a better-than-expected 0.2 per cent, giving an annual rate of 1.9 per cent. The All Industrials Index ended 16.6 points up at 3,379.4 after initially falling around 13 points. The All Resources finished 18.7 points lower at 1,342.8. Leading resource stocks dragged the market lower on the back of the coal price cuts. TAIPEI STOCKS closed 2.1 per cent lower and turnover shrank on seasonally tight liquidity ahead of the Chinese New Year. The weighted index opened slightly higher but soon fell and ended 122.37 points down at 5,835.51, near its intra-day low. Turnover dropped to NT$60.44 billion from Monday's $69.33 billion. Buying interest was severely curtailed by soaring short-term money market interest rates and the high level of outstanding margin loans. TOKYO STOCKS shrugged off Monday's precipitous falls to end sharply higher, boosted by a late flurry of index-linked buying. Persistent overseas demand and dealer buying of incentive-backed issues also propelled rises, as selling from corporations abated. Sentiment was cheered as the market seems to have largely factored in Friday's rejection of political reform bills. But most participants were sidelined, taking a wait-and-see stance. The Nikkei average ended at 18,648.36, up 295.12 points or 1.61 per cent. Volume was thin, with an estimated 280 million shares changing hands, compared with 379.1 million on Monday. ''The main buyers continued to be foreigners, and dealers who will offer the stocks to customers in London,'' said David Harris, equity trading manager at Barclays de Zoete Wedd Securities. WELLINGTON A RECOVERY in Australian share prices aided a 22-point turnaround on New Zealand's NZSE-40 capital index, with the index ending the day 8.55 points higher at 2,280.69. The index had earlier gone as low as 2,260.35. Brokers said Australian shares, taken off their lows by a lower-than-expected inflation figure for the December quarter, was the main catalyst for local issues. Tony Gallaugher at Cavill White Securities said buyers were attracted at lower levels, adding that the weakness in the morning was not convincing.