Asian markets mostly higher on euro hopes

HONG KONG—Asian markets mostly rose Monday, lifted by Italy’s backing for new austerity measures while dealers looked ahead to a Franco-German meeting to save the euro.

Investor confidence remained high after last week’s rally that was spurred by the decision of six major central banks to provide cheap dollars to under-pressure lenders in a bid to boost financial markets.

Tokyo was 0.60 percent, or 52.23 points, higher at 8,695.98, Sydney closed up 0.78 percent, or 33.3 points, at 4,321.3 and Seoul climbed 0.36 percent, or 6.86 points, to 1,922.90.

Hong Kong gained 0.73 percent, or 139.30 points, to end at 19,179.69 but Shanghai fell 1.16 percent, or 27.43 points, to 2,333.23.

The region was given a positive cue after the US Labor Department said unemployment dropped to a 32-month low of 8.6 percent in November, surprising most analysts who forecast it would hold at 9.0 percent.

The US economy created a net 120,000 jobs, close to forecasts and 20 percent above October.

On Sunday Italy’s cabinet agreed an austerity plan that aims to eliminate its budget deficit by 2013, including 17 billion euros in new taxes, 13 billion euros in public spending cuts, and 10 billion euros in measures aimed at boosting growth.

“News that Italy will accept new growth and austerity measures at least gets us on the right track and may yet be another reason for investors to pull the buy trigger this morning,” said Ben Le Brun, market analyst at OptionsXpress.

In early European trade most main markets were higher. London’s FTSE 100 climbed 0.56 percent, Frankfurt’s DAX 30 gained 0.93 percent and in Paris the CAC 40 added 1.32 percent, while the Milan exchange jumped 2.02 percent.

Markets have slumped in recent months amid fears that Italy – the eurozone’s third-biggest economy – would be the latest nation to succumb to the region’s debt crisis, after Greece, Ireland and Portugal.

The leaders of France and Germany are due to meet on Monday to hammer out a plan for further fiscal integration of eurozone economies, which is seen as the only real chance the bloc has of surviving.

In what is seen as a crucial week for the euro, the mini-summit involving French President Nicolas Sarkozy and German Chancellor Angela Merkel comes ahead of a meeting of all European Union leaders on Thursday and Friday.

Whatever proposals emerge from the talks must be seen as a credible guarantee that eurozone governments will at last bring their deficits under control and thereby satisfy markets.

European Central Bank chief Mario Draghi has said he could then take action, with many hoping the ECB will intervene to protect European banks from a credit crunch.

However, some analysts remain nervous.

“There is a substantial precedent for expecting disappointment here given that the very nature of the crisis does not lend itself to a quick fix,” said Stewart Hall, senior currency strategist at RBC Capital Markets.

Focus this week “will fall on how a ‘re-founded’ Europe will look in terms of deeper integration and the push for fiscal union,” he told Dow Jones Newswires.

On currency markets the euro fetched $1.3443 and 104.72 yen in early European trade, from $1.3403 and 104.53 yen in New York late Friday. The dollar was changing hands at 77.94 yen, compared with 78.05 yen.

New York’s main oil contract, light sweet crude for delivery in January, was up 56 cents to $101.52 a barrel in the afternoon.

Brent North Sea crude for January delivery rose 97 cents to $110.91.

Gold was trading at $1,744.88 an ounce at 1040 GMT, from $1,749.20 late Friday.

In other markets:

— Singapore closed down 0.26 percent, or 7.13 points, at 2,766.23.

Singapore Airlines fell 1.14 percent to Sg$10.45 and City Developments shed 1.65 percent to Sg$10.13.

— Taipei finished 0.60 percent, or 42.60 points, lower at 7.098.08.

Leading smartphone maker HTC fell by its daily limit of 7.0 percent to Tw$448.5 while Taiwan Semiconductor Manufacturing Co edged up 0.39 percent to Tw$76.3.

— Manila was flat, edging up 0.80 points to 4,291.72.

Lepanto Mining rose 2.9 percent to 1.77 pesos, SM Investments dipped 0.1 percent to 533 pesos and BDO Unibank added 0.4 percent to 55.90 pesos.

— Wellington closed 0.57 percent, or 18.84 points, higher at 3,301.22.

Fletcher Building rose 2.91 percent to NZ$6.37 and Telecom added 0.76 percent to NZ$2.00 while Air New Zealand slipped 2.09 percent to NZ$0.94.

— Jakarta was almost unchanged, adding just 0.96 points to 3,780.79.

Car maker Astra jumped 0.8 percent to 71,550 rupiah and Bank Rakyat rose 0.8 percent to 6,750 rupiah, while Telkom fell 1.4 percent to 7,250 rupiah.

— Kuala Lumpur ended flat, nudging up 0.93 points to 1,489.95.

UEM Land Holdings inched up 0.92 percent to 2.19 ringgit, Telekom Malaysia added 1.14 percent to 4.43 ringgit and construction firm Sumatec Resources shed 5.45 percent to 0.26 ringgit.

— Bangkok was closed for a public holiday.

— Indian shares slid 41.5 points, or 0.25 percent, at 16,805.33, amid concerns over the pace of reform after a delay in the government’s plan to open the retail sector to foreign investors.