Thursday, August 16, 2012

Asian markets lifted by Merkel comments

HONG KONG - Asian markets were mostly higher and the euro enjoyed strong support Friday as spirits were lifted by comments from German Chancellor Angela Merkel reasserting her desire to save the eurozone.

Tokyo's Nikkei index added to the previous day's healthy gains, advancing 0.63 percent by the break as the yen eased further against the dollar with dealers growing confident enough to move out of the safe haven Japanese unit.

Hong Kong added 0.59 percent, Sydney climbed 0.63 percent, and Shanghai was up 0.21 percent, while Seoul eased 0.67 percent.

Merkel, who as head of Europe's biggest economy is key to the success of any plan to save the euro, said Thursday she backed European Central Bank chief Mario Draghi's commitment to do whatever was needed to support the currency.

On a visit to Canada she said: "What he said is something that we repeated time and again," since the Greece crisis began more than two years ago, "that we feel committed to do everything we can in order to maintain the common currency".

She said the ECB was "completely in line with what we've said all along" and its decision to set conditions on bond-buying was "a positive development for the euro-area".

The comments were seen by traders as a sign she could be warming to the idea of the ECB buying up bonds of troubled sovereign states such as Spain and Italy, which have seen their borrowing costs soar to danger levels recently.

Global markets have been enjoying gains over the past few weeks on expectations the bank will restart the bond-buying programme.

The euro was given a strong lift in New York on Merkel's remarks and it held up in Asia.

The single currency bought $1.2350 and 98.04 yen in early Asian trade, compared with $1.2358 and 98.06 yen in New York and well up from the $1.2270 and 97.15 yen it fetched in Asia Thursday.

The yen was also lower against the dollar, with the upbeat outlook providing support to riskier assets, while expectations of another round of Federal Reserve pump priming are also easing.

The dollar fetched 79.37 yen in early Asian trade, from 79.33 yen in New York late Thursday.

The greenback was helped by US data on new jobless claims and housing construction, which provided more evidence that the world's biggest economy is growing steadily, albeit slowly.

Weekly numbers for new unemployment insurance claims, an indicator of the pace of layoffs, came in as expected and in the same range as the past four months, while July data on new housing construction, although slightly down from June, showed an industry steadily picking up pace.

On Wall Street the Dow rose 0.65 percent, the S&P 500 added 0.71 percent and the Nasdaq climbed 1.04 percent.

But Facebook shares plunged 6.3 percent to a new low of $19.87 as the lockup period for sales by pre-IPO investors ended. The company's share price has almost halved since its May 18 initial share offering at $38.

New York's main oil contract, West Texas Intermediate light sweet crude for delivery in September, was down 22 cents to $95.38 a barrel in Asian trade Friday and Brent North Sea crude for October delivery sank 66 cents to $114.61.

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