Asian markets mostly up, nerves set in over Greece

Asian markets mostly rose yesterday after European leaders agreed on a treaty aimed at ending huge deficits, but traders remained cautious as Greece continued talks to slash its debt mountain.
Upbeat Japanese data also gave support but the euro remained weak as the Greek issue rumbled on and traders looked for safe havens, while the strong yen raised the possibility the government would step into forex markets again.
Tokyo rose 0.11 percent, or 9.46 points, to 8,802.51, Seoul climbed 0.79 percent, or 15.24 points, to 1,955.79, Shanghai gained 0.33 percent, or 7.57 points, to 2,292.61 and Hong Kong was 1.14 percent, or 230.08 points, up at 20,390.49.
But Sydney ended 0.23 percent, or 10.0 points, lower at 4,262.7.
On Monday in Brussels, 25 of the 27 European Union nations adopted a new pact – to be formally signed in March – that will require governments to usher in laws on balanced budgets and impose near automatic sanctions on those who violate deficit rules. Britain and the Czech Republic refused to sign.
The leaders also set up a permanent rescue fund to begin operations a year early in July, although they will discuss before that whether to boost its size from an initial 500-billion-euro (USD 660 billion) target.
However, while the plan is aimed at avoiding future deficits, Athens remains locked in talks with its creditors to convince them to accept a 50 percent hit on their investment.
The deal – which has been held up by a row over the amount of interest Greece must pay on the remainder of the debt – is key to the country getting access to a second bailout from the European Union and European Central Bank.
While Prime Minister Lucas Papademos has expressed confidence an agreement will be met, traders remained on edge.
Ric Spooner, chief market analyst at CMC Markets in Sydney, said in a note: “Markets now appear to have reached a level where they need formal confirmation that an agreement on debt restructure has been struck with private investors and that a second rescue funding package will be provided to the Greek government.
“After the rally of recent weeks, equity markets may remain nervous at current levels until these issues have been formally resolved,” he said, according to Dow Jones Newswires.
A call by Germany for the Greek government to be placed under wardenship received scant backing from other European leaders, and Greece’s education minister called the idea “the product of a sick imagination”.
In Tokyo, data showed Japan’s annual industrial output fell 3.5 percent in 2011 – hit by the March 11 quake-tsunami and floods in Thailand – but rose by a more-than-expected 4.0 percent on month in December.
It also showed household spending saw its first increase since the March disasters.
The euro bought USD 1.3167 and 100.41 yen in early European trade, compared with USD 1.3134 and 100.34 yen in New York late Monday. The dollar slipped to 76.26 yen from 76.34.
The dollar’s ongoing weakness prompted Japan’s finance minister to again suggest possible intervention after stepping in several times last year as the nation’s exporters felt the pinch from a strong yen.
“If there is excessive volatility or really speculative movement, I will be vigilant against it, and I will take decisive steps if necessary,” Jun Azumi told a regular briefing.
Azumi voiced hopes that Europe’s debt crisis would ease, helping Japanese stock markets stabilise.
On oil markets, New York’s main contract, West Texas Intermediate crude for delivery in March, was flat at USD 99.72 a barrel.
Brent North Sea crude for March delivery was up 75 cents to USD 111.50.
Gold was at USD 1,742.30 an ounce at 0815 GMT, against USD 1,735.90 late Monday. (AFP)