The key Asian markets closed more than 2% higher, with Japan, Hong Kong and South Korea among the better performers after investors bought into property and finance stocks, encouraged by the decision of the US Federal Reserve to keep borrowing costs low.

The Federal Reserve on Wednesday decided to hold overnight interest rates in a zero to 0.25% range, the level reached in December, and said that rates would likely stay unusually low for some time.

The OECD raised its forecast for the economy of its 30-member nations for the first time in two years as it expected the US slump to ease.

Japan's Nikkei 225 added 2.15% to 9,796.08 points, Hong Kong's Hang Seng Index rose 2.14% to 18,275.03 points, the South Korean Kospi rose 2.12% to 1,392.73 points and the Taiwan Taiex Index 1.22% higher to 6,457.61 points. The Singapore Straits Times Index added 1.03% to 2,302.46 points and Shanghai Composite Index rose 0.09% to 2,925.05 points.

The positive regional sentiment also spilled over the local market where the Kuala Lumpur Composite Index advanced 1.54% or 16.26 points to 1,074.11. However, European stocks eased in early trade yesterday.

Crude palm oil futures rose RM87 per tonne to RM2,342 for August delivery and RM86 to RM2,336 for September delivery, while crude oil added 28 cents per barrel to US$68.95.

Inter-Pacific Research Sdn Bhd head of research Anthony Dass said local investors were riding on the positive sentiment coming from regional markets and that fundamentally, nothing much had changed in the domestic economy to boost the market.

"The economic contraction in 2Q09 could be worse than 1Q, and we might hit rock bottom. Things will start picking up from 3Q09, and the full impact of the two stimulus packages as well as monetary policies will only be felt then."

"We could also see improvement in exports from the semiconductor industry and should commodity prices hold up, that will help push the economy upwards," he said.

At Bursa Malaysia, heavyweights including Tenaga Nasional Bhd, Malayan Banking Bhd (Maybank), Genting Bhd and Bumiputra-Commerce Holdings Bhd (BCHB) were among the gainers. Turnover was 1.49 billion shares valued at RM1.52 billion. Gainers led losers by 510 to 159, while 199 counters traded unchanged.

On the European markets, Dass said they were expected to remain low this year given that industrial output and exports were still facing negative growth.

"There is still further risk of write downs in Europe's financial sector," he said.

The US market, he said was showing mixed signals, as while there were gradual improvements in its manufacturing, retail sales and housing sales data, unemployment continued to be high.

TA Securities Research technical analyst Stephen Soo said the immediate term support for the KLCI was 1,062 and resistance at 1,080.

"In the longer term, the support level would be 1,050 while resistance is from 1,090 to 1,095," he said.

Tenaga added 25 sen to RM7.80, Maybank and BCHB rose 15 sen each to RM5.90 and RM8.95, while Genting gained 20 sen to RM5.90.

PPB Group Bhd added 40 sen to RM11.50; Petronas Dagangan Bhd 30 sen to RM8.50, Telekom Malaysia Bhd and MMC Corporation Bhd up 10 sen each to RM2.94 and RM2, while Sime Darby Bhd added five sen to RM6.85.

Lafarge Malayan Cement Bhd fell 10 sen to RM5.95; Sarawak Energy Bhd and Malaysia Airports Holdings Bhd four sen each to RM2 and RM3.20 while Tan Chong Motor Holdings Bhd fell three sen to RM1.68.

KNM Group Bhd was the most actively traded counter today with 93.88 million shares done. The stock added 2.5 sen to 88 sen.

Other actively traded stocks today included Tebrau Teguh Bhd, MK Land Holdings Bhd, Jaks Resources Bhd, UEM Land Holdings Bhd and Scomi Group Bhd.