Monday, November 14, 2011

Stocks, euro rise on hopes of progress in Europe

SINGAPORE (Nov 14): Asian stocks and the euro rose on Monday on hopes that new leaders in Italy and Greece will take decisive action to save their indebted nations from bankruptcy and fend off a wider financial meltdown in the euro zone.

Italy's president appointed former European Commissioner Mario Monti on Sunday to head a new government, while in Greece Lucas Papademos, a former European Central Bank policymaker, has been sworn in as prime minister.

Both leaders have been charged with pushing through reforms and austerity plans to restore their countries' tattered credibility.

"Everything went to plan if you like over the weekend, so we're seeing a positive reaction," said Michael Turner, strategist at RBC Capital Markets in Sydney.

Japan's Nikkei share average rose 1.5 percent, while MSCI's broadest index of Asia Pacific shares outside Japan was up 0.8 percent.

The euro traded around $1.3770, up about 0.2 percent, having risen as high as $1.3811 in early trade.

Traders warned the market's continued positive reaction hinges on how Italy's planned sale of 3 billion euros of five-year bonds on Monday is received by the market.

Italian 10-year bond yields soared above 7 percent last week to levels seen as unsustainable. Borrowing costs of more than 7 percent have previously driven Greece, Ireland and Portugal to seek bailouts.

While Italian yields have come off their peaks they remained elevated. Analysts fear Rome's potential inability to fund itself could be a systemic risk given the size of its economy and its status as the world's third-largest government debtor.

Commodities markets were mostly higher, with U.S. crude creeping above $99 a barrel, Brent crude gaining 0.3 percent to $114.44 and gold rising 0.2 percent to around $1.792 an ounce. ' Reuters


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