Asian stocks rebound after US Fed puts rates on hold

Asian markets have rebounded after the US Federal Reserve said it will keep interest rates on hold and Wall Street had its best day in two years.

The decision by the US central bank to keep rates at current levels until at least 2013 helped stem one of the biggest sell-offs in recent years.

Japan's Nikkei 225 index gained 2%, South Korea's Kospi rose 4% and Australia's ASX added 1%.

However, analysts say markets will remain choppy amid global growth fears.

They said that many investors were still concerned about global growth and the fact that the Fed did not announce any new measures to boost expansion, such as an economic stimulus package.

"A lot of traders will be disappointed that the Fed did not go any further," said Robin Bew of the Economist Intelligence Group.

One of the key reasons behind the massive sell-off over the past few days has been the fear that the US, the world's biggest economy may be falling into recession.

Those fears were fanned last week by Standard & Poor's decision to cut the US's credit rating from triple A to AA+ for the first time.

These events coupled with the ongoing debt issues in Europe had investors worried that demand from the two biggest economic regions in the world may weakens. That in turn would hurt growth in the export-dependent Asian economies.

Analysts said that while the markets may have overreacted to the rating downgrade, concerns about long-term growth are the main focus at present.

"The immediate nervousness triggered by the downgrade...that is dissipating," said Mr Bew.

"But long-term worry, that the US and Europe have some serious issues and really don't seem to have a policy answer to them, still remains," he added.