Asia shares jump, euro firms on Greece report

22 Feb 2010, 1354 hrs IST, REUTERS

HONG KONG: Asian stocks leapt to their highest in nearly a month on Monday as risk appetite improved on talk of a quick bailout for Greece and as investors looked past the Federal Reserve's discount rate hike to signs of strength in the US economy.

The euro edged higher after German magazine Der Spiegel reported at the weekend that Germany's finance ministry had prepared a bailout plan for debt-laden Greece in which euro zone countries would provide aid worth 20 billion to 25 billion euros.

European stock index futures pointed to a slightly higher open as markets waited to see if a rescue plan would really materialise, while US stock futures rose 0.3 per cent.

A pause in the dollar's rally spurred gold to its highest level in a month and helped oil prices to a six-week high.

The MSCI index of Asian stocks traded outside Japan rose 2.2 per cent, at one point hitting its highest level since Jan 26, helped by shares in the materials and energy sectors as commodity prices pushed higher.

"Positions have been significantly unwound and are very light across most asset classes," said Peter Redward, head of Emerging Asia Research, Barclays Capital, referring to recent market jitters about Greece and concerns about monetary tightening globally.

"That means potentially if we get a period of good news, we could see markets run for a little while."

Japan's Nikkei stock average rose 2.7 per cent to its highest close in three weeks. The rally was led by exporters whose shares were boosted by a weak yen amid recent dollar strength.

"Investors on Friday were worried about the impact of the US discount rate hike on Wall Street, but US markets in the end were quite settled," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

The Fed said late on Thursday that it would raise the interest rate it charges banks for emergency loans to 0.75 per cent from 0.5 per cent, taking a step towards normalising emergency policy used to fight the worst financial crisis since the Great Depression.

Asian stock markets fell heavily on Friday in the first global reaction to the move, but after initial nervousness US investors preferred to view it as a sign that the economy was healing, helping stocks on Wall Street close out their best week of the year.

Asian share markets were also buoyed by a relatively calm start in Chinese markets as they re-opened after a week-long holiday and had their first chance to react to a surprise central bank tightening move on Feb 12.

Markets had feared a heavy selloff in Shanghai after the People's Bank of China raised banks' reserve requirements for the second time this year, but China's key stock index was little changed for much of the day before ending down 0.5 per cent.

Hong Kong's benchmark Hang Seng Index rose 2.3 per cent, lifted by consumer-sector focused China Resources Enterprise amid signs of stability in Chinese markets and oil producer CNOOC which rose on firmer oil prices.