Eurozone hopes, Wall St. rally lift Asia markets
HONG KONG—Asian markets surged for a fourth straight day on Tuesday as dealers followed a rally on Wall Street sparked by a French and German promise to back up beleaguered eurozone banks.
Adding to the sense of optimism was a decision by France, Belgium and Luxembourg to bail out Dexia bank, the first lender to be dragged under by the European debt crisis.
Tokyo closed 1.95 percent higher, or 168.06 points, at 8,773.68, South Korea’s KOSPI ended 1.62 percent higher, or 28.58 points, at 1,795.02, and Sydney’s S&P/ASX 200 gained 0.63 percent, or 26.6 points, to 4,227.6.
Hong Kong’s benchmark Hang Seng index closed 2.43 percent, or 430.53 points, higher at 18,141.59, while Shanghai edged up 0.16 percent, or 3.73 points, to 2,348.52.
Hong Kong and Shanghai were given a lift after one of China’s sovereign wealth funds bought stakes in the mainland’s four biggest lenders.
Asian traders have been in a buying mood for several sessions as fears that any Greek default would be contagious eased slightly, thanks to top European figures saying everything possible would be done to protect other economies.
That culminated Sunday with German Chancellor Angela Merkel joining French President Nicolas Sarkozy in saying they would help recapitalize the region’s banks. The pair vowed to detail a plan for the banks within two weeks.
Despite the lack of any specifics on what they would do, the announcement gave investors some confidence that leaders were coming together to overcome a crisis many fear could spark another global financial downturn.
Asian markets soared on the news on Monday as regional investors watched Wall Street and Europe also post healthy gains.
On Wall Street, the Dow climbed 2.97 percent, the S&P 500 jumped 3.41 percent and the Nasdaq surged 3.50 percent.
And in Europe London’s FTSE 100, Frankfurt’s DAX and the Paris CAC-40 jumped. However, in early trade Tuesday the main European markets retreated slightly on profit-taking.
Cameron Peacock, IF Markets chief market analyst in Sydney, told Dow Jones Newswires: “The market probably needs to see the proverbial proof (on Europe fixing its problems) in the pudding before it gets too carried away.”
Also bolstering confidence was France, Belgium and Luxembourg’s decision to help Dexia, the second time in three years that the lender has needed a rescue.
The move suggests that European governments are willing to prevent the region’s banks from being swamped.
The euro edged lower after surging on the Merkel-Sarkozy news in New York on Monday.
The euro bought $1.3602 in Europe in early trade, from $1.3637 late Monday in New York, while it also fetched 104.59 yen, compared with 104.60.
It had been at $1.3477 and 103.43 yen in afternoon trade in Asia Monday.
The greenback traded at 76.66 yen Tuesday from 76.70 yen in New York.
Hong Kong and Shanghai soared in early trade, boosted by China’s big four banks after sovereign wealth fund Central Huijin Investment bought stakes in each of them in a government move to shore up financial markets and boost confidence in the lenders.
However, most of the Shanghai index’s gains were wiped out as fears over the domestic economy returned.
China Construction Bank ended up 2.5 percent, Bank of China rose 2.1 percent, Agricultural Bank added 2 percent and Industrial and Commercial Bank was 1.5 percent higher.
New York’s main oil contract, light sweet crude for delivery in November, fell 63 cents to $84.78 per barrel.
Brent North Sea crude for November dipped 87 cents to $108.08.
By 1100 GMT gold was at $1,660.55 an ounce, down from $1,663.70 at 1100 GMT on Monday.
In other markets:
— Taipei added 2.59 percent, or 186.75 points, to 7,398.71.
HTC was up 7 percent at Tw$735.0 while Taiwan Semiconductor Manufacturing Co rose 1.3 percent to Tw$70.
— Singapore’s Straits Times Index closed up 24.75 points, or 0.93 percent, to 2,693.05.
— Manila closed 1.70 percent, or 68.69 points, higher at 4,109.27.
SM Investments rose 0.8 percent to 510 pesos, Ayala Land jumped 3.5 percent to 15.84 pesos and Philippine Long Distance Telephone added 2.3 percent to 2,210 pesos.
— Indian shares slid 0.13 percent, or 20.76 points, to 16,536.47
IT outsourcer Infosys’ shares slid 3.17 percent to 2,509.2 rupees while rival TCS closed down 2.26 percent to 1,041.2.
— Kuala Lumpur shares rose 1.05 percent, or 14.61 points, to end at 1,411.65.
Malayan Banking gained 0.6 percent to 8.25 ringgit, and gaming giant Genting increased 4.5 percent to 9.50 ringgit. Utility Tenaga Nasional lost 0.4 percent to 5.27 ringgit.
— Indonesian shares rose 80.67 points or 2.34 percent to 3,531.75.
Bank Mandiri gained 3.2 percent to Rp6,450, BCA jumped 3.3 percent to Rp7,750, while car maker Astra soared 2.7 percent to Rp65,900.
— Bangkok rose 2.34 percent, or 21.63 points, to 944.80.
Banpu gained 12 baht to 568, while PTT added 12 baht to 292.
— Wellington rose 0.69 percent, or 23.30 points, to 3,396.15.
Fletcher Building rose 0.8 percent to NZ$7.90 and Telecom was up 0.2 percent at NZ$2.565 while Fisher & Paykel Appliances rose 3.3 percent to NZ$0.47.
