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Backing for Greece lifts Asian markets

15 september 2011, 14:52
Stock markets rose in Asia Thursday after France and Germany stood behind Greece and backed it to stay in the eurozone despite ongoing concerns about its ability to overhaul its economy, AFP reports.

The leaders of Europe's two biggest economies said they had been given assurances by the Greek prime minister that he would stand by all the harsh austerity measures he agreed to in order to receive a bailout.

The news provided some much-needed relief for markets, which had suffered heavy selling pressure this week amid fears Athens could default on its debt obligations or even be forced out of the eurozone.

Tokyo gained 1.75 percent, or 150.29 points, to 8,668.86, Sydney rose 1.65 percent, or 65.9 points, to 4,071.7 and Seoul was up 1.42 percent, or 24.92 points, at 1,774.08.

However, lingering concerns over Europe's woes meant markets were off their earlier highs.

In the afternoon Hong Kong and Shanghai were flat.

After a teleconference with George Papandreou, German Chancellor Angela Merkel and France's President Nicolas Sarkozy were "convinced that the future of Greece is in the eurozone", Sarkozy's office said.

"The Greek prime minister confirmed his absolute determination to put in place all the necessary measures to carry out all of the commitments made."

Failure to implement the tough measures could cost Greece vital funds out of the 110-billion-euro ($150-billion) EU-IMF bailout that rescued it from bankruptcy last year.

If auditors decide not to unlock the next tranche in rescue loans, Athens would run out of cash next month. It only narrowly missed out on a default earlier this year.

Wall Street welcomed the announcement. The Dow jumped 1.27 percent, while the S&P 500 climbed 1.35 percent and the tech-heavy Nasdaq Composite rallied 1.60 percent.

However, David Land, Head of Analysis at CMC Markets, said "there is not a great deal of substance behind the rally".

"When you look at the drivers over recent sessions, investors seem to be willing to grab on to even the hint of positive news," he told Dow Jones Newswires.

"At the same time, they are selling aggressively based on the negatives. This type of activity will just wear away on confidence."

The euro also managed to claw back some losses made earlier this week, rising above $1.3700 in New York late Wednesday, but eased back slightly in Asia.

In afternoon trade it bought $1.3716, down from $1.3750 in New York but up from the $1.3500 levels seen on Monday. The common currency stood at 105.20 yen against 105.44 in New York.

It had hit 10-year lows below 104 yen on Monday.

The dollar bought 76.71 yen, also little changed from 76.64 yen in New York.

Investors are looking to an informal meeting of EU finance ministers and central bankers on Friday, in which US Treasury Secretary Timothy Geithner will participate.

The meeting in the southwestern Polish city of Wroclaw comes amid mounting pressure, including from the United States, for countries inside the eurozone to get a grip on the sovereign debt crisis.

On oil markets New York's main contract, light sweet crude for delivery in October, was down 43 cents to $88.48 in morning trade, and Brent North Sea crude for October eased 53 cents to $111.87.

Gold was trading at $1,810.20 an ounce by 0600 GMT, down from $1,828.30 in late trade Wednesday as risk appetite improved.

In other markets:

-- Taipei jumped 2.17 percent, or 157.21 points, to 7,385.68.

Taiwan Semiconductor Manufacturing Co added 2.83 percent to Tw$69.1 while MediaTek surged 6.08 percent to Tw$296.5.

-- Manila closed 0.76 percent, or 32.54 points, higher at 4,291.40.

Lepanto Mining rose 1.5 percent to 1.31 pesos, Union Bank was up 0.7 percent at 60.55 pesos and SM Prime surged 5.7 percent to 12.90 pesos.

-- Wellington ended 0.26 percent, or 8.39 points, higher at 3,272.50.

Exporter Fisher & Paykel Healthcare gained 1.9 percent to NZ$2.17 and Kiwi Income Property Trust was also up 1.9 percent, at NZ$1.05.

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