Asia: Markets follow US, Europe higher on Greece hopes

[HONG KONG] Most Asian markets climbed Tuesday and the euro stood its ground on growing hopes Greece and its creditors will finally hammer out a debt reform deal that will avoid a default and possible eurozone exit.

The gains tracked a record close on Wall Street while European markets soared, including a nine percent surge in Athens.

Investors were also cheered by preliminary figures suggesting a contraction in Chinese manufacturing activity may be easing.

Tokyo jumped 1.43 per cent, Sydney rallied 1.13 per cent and Seoul was up 1.28 per cent while Hong Kong was 0.20 per cent higher.

Shanghai, which plunged more than six per cent Friday before a long weekend, edged up 0.38 per cent.

Eurozone leaders said they were confident they would bring an end to the five-month crisis over Greece's bailout reform after Athens submitted proposals aimed at freeing up much-needed cash to help it pay its bills.

Cash-strapped Greece is at risk of defaulting on a 1.5-billion-euro (S$2.28-billion) IMF payment on June 30 if it fails to reach a deal. That could lead to the country crashing out of the eurozone and even the European Union.

After an emergency summit in Brussels on Monday, eurozone heads told their finance ministers to hold fresh talks on Wednesday to thrash out the details of an accord ahead of a summit of the 28 EU leaders on Thursday.

EU sources told AFP that Greece had now met 90 per cent of the conditions set by its creditors, while European Commission chief Jean-Claude Juncker told a news conference he was "convinced" a deal would be done.

On Wall Street the Nasdaq rose 0.72 per cent to a new record, the Dow added 0.58 per cent and the S&P 500 advanced 0.61 per cent.

And Athens rocketed 9.0 per cent, the CAC 40 in Paris jumped 3.81 per cent, Frankfurt's DAX 30 also gained 3.81 per cent. London's benchmark FTSE 100 rose 1.72 per cent, the Milan exchange added 3.46 per cent and Madrid climbed 3.87 per cent.

The euro bought US$1.1330 and 139.93 yen in Tokyo trade, compared with US$1.1340 and 139.91 yen in New York late Monday.

"Hopes are likely to heighten for a positive outcome over the Greek issue before a European Union summit later this week after Greece signalled readiness to compromise," Yujiro Goto, currency strategist at Nomura Holdings, told Bloomberg News.

The dollar was at 123.38 yen against 123.38 yen in New York but well up from 122.73 yen in Tokyo earlier Monday.

Buying on Tuesday was also supported by HSBC's early June reading of China manufacturing. Its purchasing managers index came in at 49.6, just below the 50 mark that separates contraction from growth but up from May's 49.2. It also beat a forecast of 49.4 by economists surveyed by Bloomberg.

The figures feed hopes the world's number two economy may be about to pick up after a series of interest rate cuts that come in response to a sharp slowdown over the past several quarters.

On oil markets US benchmark West Texas Intermediate fell 19 cents to US$60.19 a barrel and Brent crude dropped 10 cents to US$63.24.

Gold fetched US$1,187.24 compared with US$1,192.86 late Monday.

AFP