Asian markets rise on Europe debt meeting

HONG KONG—Asian markets rose Monday as investors reacted to positive US economic data and news that Europe vowed to its G20 partners at the weekend to take swift action on tackling its debt crisis.

Tokyo closed 1.50 percent, or 131.64 points, higher at 8,879.60, Sydney ended up 1.70 percent, or 69.8 points, at 4,275.4 while Hong Kong surged 2.01 percent, or 372.20 points, to 18,873.99.

The Shanghai Composite Index, which covers both A and B shares, was up 0.37 percent, or 9.02 points, to 2,440.40. Seoul gained 1.62 percent, or 29.78 points, at 1,865.18.

The markets took a lead from Wall Street and European bourses, which jumped Friday amid hopes the G20 meeting would result in a plan to battle Europe’s fiscal woes and prevent the world economy from slipping back into recession.

Speaking after a meeting of G20 finance ministers and central bankers in Paris, French Finance Minister Francois Baroin said the eurozone would present answers as soon as next weekend, at a summit of EU leaders in Brussels.

“The results of the October 23 summit will be decisive,” Baroin said. “We are acting resolutely to maintain financial stability.”

The G20 finance chiefs welcomed Europe’s efforts but made it clear more needed to be done.

“We look forward to further work to maximise the impact of the (European bailout fund) in order to avoid contagion,” they said in a joint statement.

US Treasury Secretary Tim Geithner said they “heard encouraging things from our European colleagues in Paris about a new comprehensive plan to deal with the crisis on the continent.”

However, Geithner warned that the plan must include measures to ensure that European governments could borrow at sustainable interest rates, a broad recapitalization of banks, and further support for debt-riddled Greece.

“The plan has the right elements,” he said, but cautioned: “They clearly have more work to do on the strategy and the details.”

German Chancellor Angela Merkel and French President Nicolas Sarkozy have pushed hard for the idea of a tax on financial market transactions.

G20 nations, which represent 85 percent of the global economy, pledged to announce at next month’s Cannes summit concrete steps to boost growth as the world economy skids.

Reducing Greece’s debt, now more than 150 percent of annual output, to a more sustainable level is emerging as a key element to resolve the eurozone crisis.

At a July summit eurozone leaders decided to ask investors to take a loss of 21 percent on Greek bonds as part of a second rescue program for Greece.

But experts say Greece needs to cut its debt by around half to put the country’s finances on a firm footing.

“I think the move toward a plan that’s credible and deliverable is what the market is focusing on and the time frame has really been tightened up with the EU summit this weekend now expected to agree on a plan,” said Macquarie Private Wealth investment adviser John Milroy.

After finally getting approval this week on boosting their European Financial Stability Facility (EFSF) bailout fund to 440 billion euros ($600 billion), eurozone leaders are already studying ways to leverage its assets up to 2.5 trillion euros.

The enhanced EFSF will be able to inject money into shaky banks or intervene instead of the European Central Bank to support weaker eurozone countries facing problems in raising fresh funds on the markets.

Markets may remain shaky pending more details about the state of Greece’s finances, despite the growing optimism about Europe’s debt plan.

“The market has more or less factored that in,” Kazuhiro Takahashi, general manager of investment strategy at Daiwa Securities, told Dow Jones Newswires.

Investors were also cheered by US retail sales data Friday which showed a higher-than-expected 1.1 percent rise in September over the previous month.

Europe’s main equity markets jumped in early trade Monday, with the euro rallying to stand above $1.39 for the first time in a month.

London’s benchmark FTSE 100 index climbed 1.20 percent to 5,531.75 points, Frankfurt’s DAX 30 rallied 1.70 percent to 6,068.37 points and in Paris the CAC 40 gained 1.27 percent to 3,258.84.

The euro reached $1.39 before sliding back to $1.37 by 1100 GMT.

The European single currency edged down to 106.46 yen from 106.96 yen.

The dollar fetched 77.22 yen, little changed from 77.21 yen.

New York’s main oil contract, light sweet crude for delivery in November, lost 25 cents to $86.87 per barrel in the afternoon.

Brent North Sea crude for delivery in December dropped 74 cents to $111.57.

By 1100 GMT gold was at $1,684.73 an ounce, compared with $1,681.10 earlier Monday.

In other markets:

— Singapore’s Straits Times Index closed up 34.80 points, or 1.27 percent, to 2,778.97.

Fraser and Neave fell 0.84 percent to Sg$5.94 while Keppel Land rose Sg$2.64 percent to 2.72.

— Taipei rose 103.04 points, or 1.40 percent, to 7,461.12.

Smartphone maker HTC gained 0.82 percent to Tw$742.0 while Chunghwa Telecom was 0.81 percent higher at Tw$99.3.

— Indian shares fell 0.34 percent, or 57.6 points, to 17,025.09.

Energy giant Reliance fell 3.88 percent to 833.2 rupees, while the country’s largest software exporter TCS fell 1.3 percent to 1,119.8 ahead of its quarterly earnings.

India’s largest car maker Maruti Suzuki India rose 2.39 percent to 1,053.05 rupees.

— Kuala Lumpur shares rose 1.59 percent, or 22.92 points, to end at 1,465.35.

Budget carrier AirAsia gained 5.90 percent to 3.59 ringgit, while UEM Land Holdings increased 6.77 percent to 2.05. Insurance group Kurnia Asia fell 0.98 percent to 0.51 ringgit.

— Manila added 61.05 points, or 1.47 percent, to 4,214.45 points.

Top-traded Manila Mining Corp. gained 10.9 percent to six centavos while Lepanto Consolidated Mining “A” shares rose 3.79 percent to 1.37 pesos.

— Bangkok rose 1.66 percent, or 15.82 points, to close at 971.63.

Banpu jumped 32 baht to 606, while Siam Cement added 12 baht to 306.

— Indonesian shares rose 64.34 points or 1.76 percent to 3,729.02.

Car maker Astra jumped 3.1 percent to Rp 69,000, Bank Mandiri rose 2.3 percent to Rp 6,750, while coal producer Indika increased 9.2 percent to Rp 2,850.