Asian stocks rallied and the yen slipped on Thursday after central banks from China to Europe and the United States cut interest rates to support the global economy.

In an unprecedented display of international coordination, the Federal Reserve, the European Central Bank along with several others including China's central bank on Wednesday executed emergency rate cuts, hours after equity markets plunged in Asia and Japan's Nikkei share average chalked up its biggest decline since the 1987 crash.

Still, analysts said more will certainly have to be done by policymakers before the worst financial crisis since the Great Depression is over, particularly with a meeting of the Group of Seven rich nations coming up on Friday. In the meantime the historic actions have made price action more of a two-way street.

"The cut last night in interest rates by the central banks around the world is an important repair step. We now believe it is time for patient, long-term equity investors to start to commit funds to those top-quality companies that have been beaten down so badly," said Donald Straszheim, vice chairman of Roth Capital Partners in Los Angeles, in a note to clients.

Tokyo's Nikkei rose 1.9 percent after plummeting more than 9 percent on Wednesday to its lowest close since June 2003.

The MSCI index of Asia-Pacific shares outside of Japan rose 2.1 percent, after it too tumbled 9 percent on Wednesday, its the biggest single-day fall in at least 20 years.

Hong Kong's Hang Seng index rebounded 2.8 percent after three-days of losses had taken it to the lowest close in two years. Valuations were the lowest since the Asian financial crisis about a decade ago.

Australia's benchmark S&P/ASX 200 index dropped 1.2 percent, led by the mining and bank industries, despite a full one-percentage point cut in borrowing costs earlier this week by the Reserve Bank of Australia.

The S&P 500 index fell for a sixth consecutive day on Wednesday, as investors decided it was safer to sell despite the unified move to stop what has become a financial catastrophe. US stock futures were up 1 percent.

The yen slipped after soaring higher overnight, with dealers unravelling some safety trades. Many analysts say the yen will likely remain firm as long as the crisis persists because of the appeal of Japan's current account surplus and its stable financial sector.

The dollar rose 1.6 percent against the yen to 100.70 yen rebounding from a six-month low of 98.60 yen hit on Wednesday.

The euro also recovered against the yen, up 2 percent at 138 yen after falling to a three-year low of 134.15 yen on Wednesday.

Even after the half-percentage point emergency rate cut by the Federal Reserve, the futures markets still reflects a 90 percent chance the US benchmark rate will be lowered by a quarter point by the next policy meeting on October 29.

The global actions to ease monetary policy so far were not taken without risks. Economists said dysfunctional short-term lending markets could mute the intended effects of such broad-based measures. Without the flow of credit, the global economy is still likely on a path to slowing sharply.

"A risk for serious global recession has increased as the coordinated rate cuts are not doing much in stabilising financial markets. That would have an adverse effect on Asian economies, in which the manufacturing sector has a large share," said Masamichi Adachi, senior economists with JPMorgan Securities in Tokyo.

Base metal prices remained under pressure with Shanghai zinc prices down by their 4 percent limit on concerns about industrial demand. -Reuters