Asia stocks bounce back after Cyprus scare

Asian stock markets bounce back after falling on plan to tax Cypriot bank deposits

Associated Press
Asia stocks bounce back after Cyprus scare
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In this image taken Saturday, March 16, 2013, people queue to use an ATM machine outside of Bank of Cyprus branch in southern port city of Limassol, Saturday, March 16, 2013. Many rushed to cooperative banks which are open Saturdays in Cyprus after learning that the terms of a bailout deal that the cash-strapped country hammered out with international lenders includes a one-time levy on bank deposits. The move, decided in an extraordinary meeting of the finance ministers of the 17-nation eurozone in the early hours Saturday, is a major departure from established policies. Analysts have warned that making depositors take a hit threatens to undermine investors' confidence in other weaker eurozone economies and might possibly lead to bank runs. (AP Photo/Pavlos Vrionides)

BANGKOK (AP) -- Asian stock markets rose Tuesday, shaking off jitters sparked by a plan to give bank deposits in Cyprus a haircut to help fund the European country's bailout.

Most benchmarks rose moderately while Japan's Nikkei 225 index jumped 1.8 percent to 12,442.20 as the yen dropped against the dollar.

Hong Kong's Hang Seng rose 0.4 percent to 22,175.11. South Korea's Kospi rose 0.7 percent to 1,981.03. Benchmarks in Singapore, Taiwan and Indonesia were also higher, while the Philippines dropped. After opening higher, Australia's S&P/ASX 200 reversed course and fell 0.6 percent to 4,987.40.

Stock markets dropped around the world Monday as jitters intensified over an agreement between cash-strapped Cyprus and its lenders to fund a 15.8 billion euros ($20.4 billion) rescue plan by taxing deposits in the country's banks. Analysts said Monday's sell off might have been an overly strong reaction to problems in Cyprus.

"For yesterday, the whole Asian market had a big drop, but maybe dropped too much," said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. "Maybe there is overreaction in Hong Kong yesterday so today we have a rebound."

But some analysts said the crisis over Cyprus calls into question the viability of the euro common currency and could undermine those who favor regional unity. If implemented, the plan would represent the first time in the European debt crisis that bank deposits have been seized and has stoked fears of bank runs among the 16 other countries that use the euro.

"The crisis creates further risks to the fragile pro-EU, pro-euro political consensus," said Tina Fordham, political analyst at Citigroup Global Markets. "We believe a proportion of the Europe-wide electorate will be disconcerted over the long-term by the implied threat to the deposit guarantee, and this sentiment will be promoted by anti-Europe politicians."

Cypriot authorities delayed a parliamentary vote Monday on the plan and ordered the country's banks to remain closed until Thursday while they try to modify the deal to lessen the impact on small depositors.

Among individual stocks, Japan's Sony Corp. surged 6.2 percent. Mazda Motor Corp. advanced 5.2 percent.

On Wall Street, the Dow dropped 0.4 percent to 14,452.06. The Standard & Poor's 500 index fell 0.6 percent to 1,552.10. The Nasdaq composite index dropped 0.4 percent to 3,237.59.

Benchmark oil for April delivery was up 5 cents to $93.79 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 29 cents to close at $93.74 per barrel on the Nymex on Monday.

In currencies, the euro rose to $1.2955 from $1.2948 late Monday in New York. The dollar rose to 95.55 yen from 95.42 yen.

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