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Asian shares higher on eurozone hopes

Asian shares higher on eurozone hopes
AFP
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First Published: Tue, Jun 21 2011. 10 43 AM IST
Updated: Tue, Jun 21 2011. 10 43 AM IST
Hong Kong: Asian stock markets rose in early trade Tuesday following a rally on Wall Street as dealers grew optimistic that the Greek debt crisis may be resolved soon.
As attention turned to a confidence vote in Greece’s prime minister and the beginning of a meeting of the US Federal Reserve policy committee, investors were keen to pick up cheaper stocks after selling in the previous two sessions.
Tokyo was 0.89% higher by the break, Hong Kong added 0.87%, Sydney added 1.10% and Shanghai was 0.61% up while Seoul jumped 1.08%.
Europe gave Athens a two-week deadline to pass 28.4 billion euros ($40.65 billion) of cuts, as the IMF warned the stability of the global economy rested on the confidence vote in Prime Minister George Papandreou’s government later Tuesday.
Eurozone officials decided to meet again on 3 July -- to allow the vote to take place -- to decide on emergency cash and work out the details of a second bailout worth more than €100 billion.
They will also stage a summit in Brussels on Thursday and Friday -- with another bailout for Greece, whose debts currently top 350 billion euros, near the top of a agenda.
If Greece does not get the money in time it could default on its loans by the middle of next month, which some warn could spread to other eurozone nations and spark a financial crisis similar to that in 2008-2009.
“Failure to undertake decisive action could rapidly spread the tensions to the core of the euro area and result in large global spillovers,” an IMF report warned.
Japan Tuesday pledged to keep providing support, saying it would continue buying bonds from a eurozone rescue fund.
Japan has previously pledged to help boost confidence in the bonds issued by the European Financial Stability Facility (EFSF), amid concerns earlier this year for eurozone nations such as Portugal and Ireland.
The Federal Reserve meeting on Tuesday and Wednesday, which is expected to announce interest rates being kept on hold, will also provide a clearer view of the state of the world’s number one economy.
Dealers will also want to hear what its chairman Ben Bernanke has to say after the meeting ends.
“The widespread view is that the slowdown of the US economy is temporary, but investors want to confirm whether that’s the understanding during Bernanke’s press conference,” said Hiroichi Nishi, general manager at SMBC Nikko Securities.
The committee is expected to announce its $600 billion Treasury bond purchases programme will expire as scheduled by the end of June, and not announce additional stimulus amid weak economic growth.
Upbeat sentiment was reflected on Wall Street, with the Dow up 0.63%, the broader S&P 500 0.54% higher and the tech-heavy Nasdaq gaining 0.50%.
The euro firmed against the dollar in early Tokyo trade, changing hands at $1.4332 against $1.4301 in New York late Monday while it also rose to 114.85 yen from 114.77. The dollar dipped slightly to 80.13 yen from 80.20 yen.
Oil was up in Asian trade, with New York’s main contract, West Texas Intermediate light sweet crude for July delivery, rising 54 cents to $93.80 and Brent North Sea crude for August advancing 15 cents to $111.84.
Gold opened in Hong Kong at $1,541.00-$1,542.00 an ounce, up from Monday’s close of $1,537.00-$1,538.00.
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First Published: Tue, Jun 21 2011. 10 43 AM IST
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