HONG KONG -- Stocks rallied across Asia then opened higher in Europe on Monday as traders bet Saddam Hussein's capture could mark a turning point in the Iraq conflict.
The arrest of the former Iraqi dictator by U.S. troops "was definitely an unexpected Christmas present" for stock investors worldwide, said Tsuyoshi Nomaguchi, an equity strategist at the Daiwa Securities brokerage in Tokyo.
Tokyo's Nikkei Stock Average of 225 issues surged by 321.11 points, or 3.2 percent, to finish at 10,490.77.
"It could be the beginning of the end of the war," said UBS Securities equity strategist Shoji Hirawaka, as images of Saddam the prisoner, bearded and disheveled but recognizable, flashed around the world on televisions and in newspapers.
European markets rose from the outset, with blue chips up by 1 percent in London, 1.5 percent in Frankfurt and 1.3 percent in Paris.
Stock markets were nearly all higher across the Asia-Pacific region, though Hong Kong shares retreated slightly into negative territory at the close, down 0.6 percent after the Hang Seng Index briefly hit its top level of the year - 12,740.50 points.
"Uncertainties evaporated after Hussein's capture," said Jo Yong-Chan, an analyst at Daishin Securities in Seoul, where prices closed with a gain of 2 percent. "War-related stocks are falling and construction stocks are soaring."
Shares in Australia rose 1.1 percent on the day, while New Zealand prices added almost 1 percent by the close.
"The market's lovin' it," said Peter Cuthbertson, a private client adviser at Austock Brokers in Melbourne.
The U.S. dollar edged higher against the Japanese yen in Tokyo, while gold prices plunged. Gold was down by US$2.90 an ounce late Monday in Hong Kong, from Friday's close US$407.45.
Analysts had predicted Saddam's capture would ignite a stock market rally but they were unsure how much staying power it would have. Although it erases one big uncertainty about Iraq, it is unclear whether it will bring an end to the frequent attacks being carried out against troops from the U.S.-led coalition.
Still, traders speculated that Wall Street would surge when U.S. trading gets under way on Monday.
Many key stock markets had already been rising in recent days on an improved economic outlook, and indications of a more stable Iraq certainly wouldn't hurt. New York's Dow Jones industrial average pushed above 10,000 points last week for the first time in 18 months.