Asian stocks rise on hopes Greece won’t default

Asian stocks rise on hopes Greece won’t default

Hong Kong: Most Asian stock markets rose Thursday on optimism that Europe will be able to get a handle on its sovereign debt crisis after reassuring words from European leaders aimed at soothing jittery financial markets.

In a teleconference Wednesday night, German chancellor Angela Merkel, French President Nicolas Sarkozy and Greek Prime Minister George Papandreou all reaffirmed the belief that Greece is an “integral part" of the eurozone.

Merkel and Sarkozy pledged to help Greece avoid a debt default and Papandreou renewed his commitment to debt-reduction targets.

The news soothed markets that have been rattled over the past few days by fears that debt-ridden Greece was heading rapidly toward a chaotic default as well as the idea that it could potentially leave the euro and return to its own currency.

Japan’s Nikkei 225 index rose 1.5% to 8,646.54 while South Korea’s Kospi advanced 0.6% to 1,760.21. Hong Kong’s Hang Seng rose 0.5% to 19,134.45 and Australia’s ASX 200 rose 0.8% to 4,038.40.

Benchmarks in Singapore, Taiwan and New Zealand also rose. Mainland Chinese stocks, however, were unaffected by the good news, with Shanghai Composite Index less than 0.1% at 2,484.45 after spending the morning flip-flopping between positive and negative territory.

The sharp jump in Asian markets is characteristic of recent volatility in global financial markets and it’s unclear whether the optimism would give more than just a short-term boost, said Ben Collett, head of Japanese equities at Louis Capital Markets in Hong Kong.

“If you’re Greece, that is some positive news. A reaffirmation from two European leaders is certainly positive and it is the sort of things the market wants to hear (although) there’s not much behind it," said Collett.

“There are ways to solve the European issue but they take time. While we’re waiting for that I think it’s reasonable for the market to get a boost from the politicians but that won’t last forever," he added. Collett said markets are still pricing in a Greek default and so-called “haircut" — in which bondholders agree to accept less money than expected for their investments.

The news also bolstered markets Wednesday in the US, where the Dow Jones industrial average rose 1.3% to close at 11,246.73. The Standard & Poor’s 500 index rose 1.3% to 1,188.68.

The Nasdaq composite rose 1.6% to 2,572.55. In currencies, the dollar strengthened to ¥76.69 from ¥76.65 late in New York on Wednesday.

The euro fell to $1.3717 from $1.3752. Oil prices fell amid signs of sluggish US consumer demand. Benchmark oil for October delivery was down 31 cents $88.60 per barrel in electronic trading on the New York Mercantile Exchange.

The contract lost $1.30 to finish Wednesday at $88.91 per barrel. In London, Brent crude for October delivery was down 28 cents at $109.37 on the ICE Futures exchange.