A currency trader reacts during a morning session at the foreign exchange dealing room of the Korea Exchange Bank headquarters in Seoul, South Korea, Monday, June 18, 2012. Asian stock markets climbed Monday after elections in Greece eased fears of global financial turmoil, but analysts warned that the economic crisis shaking the 17 nations in the euro common currency was far from over. South Korea's Kospi rose 2.1 percent at 1,897.83. (AP Photo/Ahn Young-joon)
June 18, 2012 - 1:52 AM
BANGKOK - Asian stock markets were up sharply Monday after elections in Greece eased fears of global financial turmoil, but analysts warned that the economic crisis shaking the 17 nations that use the euro was far from over.
Stock markets rejoiced at the narrow victory by Greek conservatives who favour upholding an austerity program that their recession-mired country entered into in exchange for a financial bailout from international lenders.
The results relaxed fears that Greece will stop using the euro and return to its old currency, the drachma, unleashing a host of disruptive financial consequences in Europe and beyond. If a party that opposes the bailout had won the election, financial analysts worried that stock markets would fall worldwide.
Tokyo's benchmark Nikkei 225 index was up 1.9 per cent at 8,729.47. Hong Kong's Hang Seng rose 1.6 per cent to 19,532.16. Australia's S&P/ASX200 added 1.9 per cent to 4,133.70 and South Korea's Kospi rose 2 per cent at 1,895.55.
On Wall Street, Dow Jones industrial average futures were up 40 points early Monday, suggesting the market could open higher. The euro rose to $1.2703 from $1.2637 late Friday in New York. The dollar rose to 79.16 yen from 78.71 yen.
The New Zealand and Australian dollars were also higher. Both currencies typically rise when investors have more appetite for risk. The Australian dollar was trading above $1.01 and the New Zealand dollar was trading above 79 cents.
"Europe has survived its worst crisis in the 21st century. I see Europe rebounding for the rest of the year," said Francis Lun, managing director of Lyncean Holdings in Hong Kong.
On Sunday, pro-bailout parties in Greece won enough seats to form a coalition government.
Greece has been dependent on rescue loans to operate since May 2010, after it was shut out of international markets following years of profligate spending and falsifying financial data.
The country is mired in a fifth year of recession, with unemployment spiraling above 22 per cent and tens of thousands of businesses shutting down.
Greece had to agree to austerity measures to get its bailout. Measures included deep spending cuts on everything from health care to education and infrastructure as well as tax hikes and cuts in salaries and pensions. Anger at the measures has sent Greeks into the streets in frequent strikes and protests, some of them violent.
Some analysts said the election results could overstate the willingness of Greeks to embrace austerity.
"Overall, the Greek election result, while welcome, does not imply that the Greek people are embracing the tough reforms tied to the bailout package. It merely meant that fear overruled anger," analysts at DBS Bank Ltd. in Singapore wrote in a market commentary.
No one is sure how bad a Greek exit from the euro would have been. Greece would almost have certainly defaulted on its debt, triggering losses for European banks that own its government bonds. The outcome of the election, however tenuous, gives Greece a chance to breathe life into its moribund economy.
"It will be tough, but Greece will survive because I think the tourist industry and the agriculture sector will help it recover from its dire straits right now," said Lun.
Japanese vehicle makers and electronics companies soared on hopes that Europe, a huge export market, would avoid deepening economic turbulence. Mazda Motor Corp. jumped 5 per cent and Yamaha Motor Co. gained 4.2 per cent. Sony Corp. jumped 4.7 per cent.
Steelmakers and shipyards also gained ground. South Korea's top shipbuilder, Hyundai Heavy Industries, rose 2.9 per cent. Japan's JFE Holdings Inc. added 4.7 per cent and Kobe Steel rose 3.3 per cent.
In Hong Kong, Samsonite International SA rebounded 7.8 per cent after it issued a statement saying its luggage is safe, following a Hong Kong Consumer Council report last week that found carcinogens in the handles of some models, which caused its shares to dive 16 per cent.
But stock market operator Hong Kong Exchanges and Clearing Ltd. fell 3.4 per cent as investors worried a $2.2 billion bid announced last week for the London Metal Exchange was too high.
Benchmark oil for July delivery was up 85 cents to $84.87 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 12 cents to end at $84.03 a barrel in New York on Friday.
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AP Business Writer Yuri Kageyama in Tokyo contributed.
News from © The Associated Press, 2012