Asian stocks mounted a recovery on Friday after heavy morning losses as hopes rose of aggressive action to ward off a recession in the US, the region’s biggest export destination, and investors took the view that some markets were oversold.

With the US outlook darkening, President George W. Bush on Friday is to sketch out a fiscal stimulus plan of up to $150bn, expected to include tax rebates and corporate investment incentives. Comments from Ben Bernanke, Federal Reserve chairman, supported expectations of a US rate cut of at least 50 basis points at the Fed’s meeting at the end of the month.