Asian stocks rise on Europe debt plan hopes

Pamela Sampson, AP Business Writer
October 19, 2011
Greece: coalition heads to pick new premier
Greece's Prime Minister George Papandreou waves to journalists while exiting the Presidential Palace after a meeting with Greek President Karolos Papoulias and opposition leader Antonis Samaras, in Athens Sunday, Nov. 6 2011. Greece's embattled prime minister and the head of the main opposition party reached an initial agreement to form an interim government that will ensure the country's new European debt deal and then lead Greece to early elections, the president's office said. (AP Photo/Kostas Tsironis)

BANGKOK (AP) -- Asian stock markets headed higher Wednesday, with investors emboldened by reports that Germany and France were moving closer toward resolving Europe's debt crisis through a massive expansion of the region's bailout fund.Japan's Nikkei 225 index rose 0.6 percent to 8,789.83 and Hong Kong's Hang Seng was 1.7 percent higher at 18,387.88. South Korea's Kospi was marginally higher at 1,840.04. Benchmarks in Singapore, Australia and the Philippines were higher. Those in mainland China and Malaysia dropped.The Guardian newspaper reported that France and Germany have agreed to expand the rescue fund for nations using the euro common currency to euros 2 trillion ($2.74 trillion). The paper cited unnamed European diplomats and said European officials are expected to take up the expansion along with a package of other measures at a meeting this weekend.Wall Street rose sharply on the news. The Dow Jones industrial average rose 1.6 percent to close at 11,577.05. The S&P 500 index rose 2 percent to 1,225.38. The Nasdaq composite rose 1.6 percent to 2,657.43.Gains in Asia were muted, however, since investors may want to see more consistent gains before wading deeply back into the market, analysts said."Following recent volatility, it is unlikely that we will see quite as big a rally locally as our U.S. peers today. Particularly at the retail end of the market, investors will probably wait to see successive gains before rushing back into the market," Stan Shamu of IG Markets in Melbourne said in a research note.Concerns about a messy default by the Greek government have been the main cause behind many of the big swings on world stock markets lately.The fear is that a default would cause deep losses for European banks that hold Greek bonds. That could lead to a freeze in lending between banks and escalate into another financial crisis similar to the one that occurred in 2008 after the collapse of Lehman Brothers.Benchmark crude for November delivery was down 7 cents at $88.27 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.96 to settle at $88.34 in New York on Tuesday.In currencies, the euro rose to $1.3787 from $1.3747 late Tuesday in New York. The dollar fell to 76.69 yen from 76.76 yen.