TOKYO, Japan -- Asian stock markets surged Monday as a US federal takeover of ailing mortgage giants Fannie Mae and Freddie Mac eased fears of a spiraling global financial crisis, dealers said.

The Tokyo and Hong Kong markets rose more than 3.5 percent as investors cheered Sunday's dramatic move in Washington aimed at shoring up the troubled US housing market.

"Markets reacted positively at first glance to the news because it dispelled uncertainty about credit and fears of a worsening housing market," said Masatsugu Miyata, a forex dealer at Hachijuni Bank in Tokyo.

But some dealers said that the gains could be short-lived as the US bailout could put a further strain on government finances in the world's largest economy.

"The fundamental problem does not lie with the mortgage businesses but with the economy and housing market that went bust," Sumitomo Mitsui Banking Corp. chief strategist Daisuke Uno said.

Currency markets began to sell off the dollar after the greenback's early gains against the yen, indicating caution about the takeover, he said.

The US Treasury Department announced Sunday, when markets were closed, that it will put Freddie Mac and Fannie Mae under strict federal control and may invest up to $200 billion in the two mortgage giants.

The two mortgage giants are government-chartered, shareholder-owned firms providing liquidity to the US housing market. They have been whipsawed by the financial meltdown in the past year.

The companies have lost some 90 percent of their value on fears of further losses from mortgage defaults by "subprime" customers, who were given loans despite patchy credit histories.

The subprime crisis has ballooned into a global credit crunch, pummeling stock markets around the world since late last year.

But In Tokyo on Monday, the benchmark Nikkei-225 index soared 438.04 points or 3.59 percent Monday to hit 12,650.27 by the end of the morning session. Asia's biggest bourse had closed Friday at a six-month low on weak US data.

Hong Kong shares were up 3.78 percent in early trade and Singapore was up 3.74 percent. Seoul jumped 4.51 percent, while Sydney rose 3.57 percent.

However, Shanghai shares slipped some 2.0 percent in morning trade, continuing a fall on Friday.

While dealers in China also welcomed the US bailout, China is beset by concerns of a domestic credit crunch as giant public offerings sap up liquidity, dealers said.

In Japan, some analysts likened the US takeover to Japan's own bailout of its banks in the late 1990s, which helped them overcome a bad loans crisis in Asia's largest economy.

"By keeping the two mortgage financing enterprises, the US government is probably thinking it could wait until the prices of its more than five trillion securities return," said Uno of SMBC Banking Corp.

The Japanese government also welcomed the bailout plan.

"This will remove one factor causing instability in the US economy and have a good impact on the world economy," Finance Minister Bunmei Ibuki told reporters.

"Given that the dollar is an international currency, Japan welcomes the move," he said.

Ibuki said that US Treasury Secretary Henry Paulson would hold a conference call later Monday to brief his counterparts in the other Group of Seven major economies -- Britain, Canada, France, Germany, Italy and Japan.