Greece debt hopes send Asian shares higher
HONG KONG – Growing optimism that European officials are close to a plan to help Greece solve its debt crisis boosted most Asian stock markets on Tuesday and lent some support to the euro.
Global market focus was on Athens, where parliament will vote this week on a batch of austerity measures that key lenders say is necessary for the release of much-needed funds to help the country avoid defaulting on its debts.
But concerns have been soothed by reports that banks and EU officials were close to a “Plan B” where the banks would roll over half the money received from Greek debt into new 30-year bonds, giving Athens some breathing room.
Hong Kong rose 0.66 percent in early trade, Tokyo jumped 1.08 percent by the break, Sydney was 0.78 percent up and Seoul climbed 1.31 percent
Shanghai fell 0.15 percent after a five-session rally that saw it gain around five percent.
While Greek Prime Minister George Papandreou begged parliament Monday to pass the austerity bill to keep the country “on its feet”, European officials were looking into the debt rollover plan to avoid a devastating default.
“The next step is not a default of Greece,” an official said.
The European Union and the IMF have told Athens that it must pass 28.6 billion euros in budget cuts and tax hikes and a 50-billion-euro privatisation programme before it can receive the next installment of an EU-IMF bailout.
“Market direction will come from Greece rather than data over coming days and while there is some optimism about debt rollovers, the many and varied uncertainties still to be resolved suggests that any improvement in risk appetite is highly tentative,” Credit Agricole said in a note to clients, according to Dow Jones Newswires.
The upbeat outlook from Europe lifted the euro in New York and provided some support in Asia.
In early Tokyo trade the single currency firmed to $1.4316 from $1.4277 in New York late Monday and to 115.57 yen from 115.51 yen. The dollar was at 80.74 yen compared with 80.89.
The weaker yen-euro rate lifted Japanese exporters, while auto makers on the Nikkei were also likely to strengthen further because of steady progress in resuming production after the March 11 quake-tsunami disaster, an analyst said.
Wall Street was lifted by the news from Europe. the Dow rose 0.91 percent, the S&P 500 climbed 0.92 percent and the Nasdaq surged 1.33 percent.
Investors there were also upbeat as President Barack Obama became directly involved for the first time in cross-party talks on raising the US debt ceiling, which must be resolved to avoid a US government default by August 2.
Oil gained slightly on bargain buying after heavy falls since last week, when the International Energy Agency said it would release 60 million barrels of crude to make up for lost Libyan production.
New York’s main contract, West Texas Intermediate for delivery in August, gained 40 cents to $91.01 a barrel and Brent North Sea crude also for August advanced 41 cents to $106.40.
Gold opened at $1,500.00-$1,501.00 an ounce in Hong Kong, up from its Monday close of $1,494.00-$1,495.00.
