Asian markets rise on optimism over Europe summit

Markets rose in Asia yesterday on hopes that a meeting of European leaders will finally lead to a plan that will bring an end to the crippling eurozone debt crisis.
Investors are holding their breath ahead of the two-day summit that starts today, with investors optimistic after France and Germany on Monday agreed a deal for further integration, which many see as the best solution.
Adding to the sense of optimism were reports that the leaders are looking at bolstering the region’s firewall by running two huge rescue funds to protect weak economies.
Tokyo closed 1.71 percent, or 147.01 points, stronger at 8,722.17, Sydney rose 0.72 percent, adding 30.5 points to end at 4,292.5, and Seoul climbed 0.87 percent, or 16.60 points, to 1,919.42.
Hong Kong gained 1.58 percent, or 298.35 points, closing at 19,240.58 and Shanghai was 0.29 percent, or 6.82 points, higher at 2,332.73.
The advances come after Tuesday’s downbeat performance following ratings agency Standard & Poor’s decision to put the eurozone on negative credit watch, citing leaders’ inability to agree a solution.
On Tuesday S&P also put the European Financial Stability Facility (EFSF) rescue fund on watch for a possible downgrade.
Traders are cautiously optimistic that the plan thrashed out between German Chancellor Angela Merkel and French President Nicolas Sarkozy, including strict new rules for fiscal discipline within Europe, will deliver.
EU leaders will discuss the proposals, which Merkel and Sarkozy want to be enshrined into a rewritten European Union treaty, at the summit.
“There is a large risk of disappointment building as expectations seem to grow by the day,” said Jason Hughes, strategist at IG Markets in Singapore.
“This time, however, there seems to be the political will and momentum to deliver the sledgehammer blow to finally set us on [the] road to European recovery,” he told Dow Jones Newswires.
US Treasury Secretary Timothy Geithner, on a trip to Germany, said Tuesday “the eyes of the world are very much on Europe”.
The euro held up against major currencies, although analysts expect it to move in a tight range until news emerges from the Brussels summit.
The common unit fetched USD 1.3414 and 104.25 yen in early European trade, compared with USD 1.3397 and 104.14 yen in New York late Tuesday.
The dollar bought 77.71 yen, compared with 77.70 yen.
Sentiment was also given a lift by Greek lawmakers’ approval of a 2012 budget pledging tough fiscal goals, as demanded by Athens’ EU partners in return for fresh loans.
In Sydney shares received a boost from data showing the Australian economy grew a better-than-expected 1.0 percent in the September quarter from the previous three months.
The Australian Bureau of Statistics said mining and construction underpinned the robust performance, which represented year-on-year growth of 2.5 percent.
Treasurer Wayne Swan described the figures as “exceptional” in light of the ongoing global economic turmoil.
The Australian dollar was at USD 1.0270, from USD 1.0243 immediately before the GDP data.
On oil markets New York’s main contract, light sweet crude for delivery in January, gained 46 cents to USD 101.74 a barrel in the afternoon.
Brent North Sea crude for January delivery rose 34 cents to USD 111.15.
Gold was trading at USD 1,728.60 an ounce at 0950 GMT, from USD 1,721.50 late Tuesday.

(AFP)