Asian shares extend rally on Europe deal, US data

Asian shares extend rally on Europe deal, US data

Hong Kong: Asian markets extended their rally on Friday from the previous day after European leaders finally came to an agreement on a plan to tackle the region’s sovereign debt crisis.

Tokyo gained 1.39%, or 123.93 points, to end at 9,050.47, Sydney was 0.12%, or 5.1 points, higher at 4,353.3 and Seoul closed 0.39%, or 7.44 points, up at 1,929.48.

Hong Kong added 1.68%, or 330.54 points, to 20,019.24 while Shanghai was 1.55%, or 37.80 points, up at 2,473.41.

Traders remained bullish after a deal was struck in the early hours of Thursday that will see €100 billion ($140 billion) of Greece’s debts wiped out, banks reinforce their capital defences and a bailout fund get a huge boost.

“In general, markets are happy that the decision-making process seemed to be finally working and willing to put back the lack of detail on the back burner for another day," said Stewart Hall, a senior currency strategist at RBC Capital Markets.

After painstaking talks late Wednesday and early Thursday French President Nicolas Sarkozy eventually announced that Athens’ bondholders had agreed to take a 50% writedown on the money they were owed.

Their agreement completed the final segment of a deal that will also see banks recapitalize in order to withstand the huge losses.

The Brussels talks saw the European Financial Stability Facility (EFSF) bailout fund, which aims to protect other economies such as Italy and Spain, to be increased to more than one trillion euros from €440 billion.

Athens will also receive another much-needed rescue package.

European stock markets surged, with Frankfurt’s DAX 30 up 5.35%, the Paris CAC-40 jumping 6.28%, and London’s FTSE-100 up 2.89%.

Athens surged 4.82% and Milan was 5.49% higher. And in early trade Friday European markets edged further up.

The news also gave a lift to the euro, which has been languishing over the past few months as Europe’s leaders seemed unable to work out a concrete deal.

The common currency hit an eight-week high above $1.42 in New York late Thursday before settling at $1.4187. In afternoon Tokyo trade it was sitting at $1.4188.

The euro also rose to ¥107.49 in New York Thursday, well up from ¥105.98 late Wednesday before the deal was struck. In Tokyo, the euro bought ¥107.60.

However, the dollar remained under pressure from the yen, sitting at 75.84, just a little higher than its new post-war low of 75.66 struck in New York.

Adding to the upbeat mood was Washington’s first estimate of third-quarter growth, which was a better-than-expected 2.5%, quelling worries that the economy was on the verge of a double-dip recession.

The expansion was boosted by stronger consumer spending, the Commerce Department said, with Americans buying more of everything from computers to services.

The prospect of the mighty US consumer reaching into their pocketbooks raised hopes of a more firm-footed recovery after measly annual growth rates of 0.4% and 1.3% in the first two quarters.

The report sent already lively US stocks higher. The Dow jumped 2.86%, the S&P 500 gained 3.43% and the Nasdaq rose 3.32%.

New York’s main contract, light sweet crude for delivery in December, was down 47 cents to $93.49 per barrel in European trade.

Brent North Sea crude for December delivery eased 35 cents to $111.73.