Monday, October 24, 2011

Asian stocks up on EU summit hopes

HONG KONG: Asian stocks rose on Monday, Oct 24 and the euro gave back some of the gains it made last week after euro zone leaders made some progress towards a strategy to tackle the region's debt crisis.

Traders are now waiting for final details expected to be unveiled later this week.

At a summit on Sunday, European Union leaders neared agreement on bank recapitalisation and on how to use the European Financial Stability Facility to stave off bond market contagion.

Sharp differences remain, however, over the size of losses private holders of Greek government bonds will have to accept. Final decisions were deferred until a second summit on Wednesday.

For financial markets, concerns over the festering euro-zone debt crisis are likely to outweigh other data this week that include third-quarter GDP from the United States and earnings reports from Chinese banks.

Asian stocks outside Japan saw more choppy, low-volume trading but ended up 0.4 percent on the week last Friday. It was up 0.8 percent in early trade on Monday. Turnover on the Hong Kong exchange fell to its lowest since May.

In Japan, the Nikkei rose 1.4 percent in early trade. A strong yen , which rose to a record high against the dollar on Friday, is likely to cap gains and keep Japanese stocks trading in a range.

The euro dipped 0.4 percent to $1.3843 , giving back some of Friday's 0.8 percent gain. Markets were still clinging to hopes that European policymakers were moving a step closer to finding a credible solution to Europe's sovereign debt crisis.

Commodity currencies, usually sold off in times of market stress, also held steady. The Australian dollar stood at $1.0334 , versus New York's $1.0331.

"It doesn't feel to me like we're going to see a big risk rally, but we could easily see this deal done, risk remains relatively well supported, especially if we start thinking of things like another Fed quantitative easing, that'll help keep market focused on a weaker U.S. dollar," said Greg Gibbs, strategist at RBS in Sydney.

In commodities markets, brent crude for December delivery was trading up 0.2 percent while spot gold extended Friday's gains slightly and was trading at $1642.29 an ounce. - Reuters

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