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Asian stocks rise in early trade

Text by AFP

Latest update : 2008-12-10

Asian stocks edged higher in early trade after world leaders unveiled plans for a series of summits aimed at tackling the global financial crisis.

View our special report: 'Capitalism on the brink?'


Asian stocks edged higher in early trade on Monday after world leaders unveiled plans for a series of summits aimed at tackling the global financial crisis.

In South Korea, shares rallied after the government announced a 130 billion dollar package to shore up the country's troubled banking sector.

While it is too early to say the worst of the financial turmoil is over, there are tentative signs "we could be approaching a temporary reprieve," said analysts at JPMorgan.

Bargain-hunting boosted markets in the Asia-Pacific region at the start of the week.

Sydney stocks were up 2.7 percent by noon, while Japan's Nikkei index added 0.53 percent by the lunch break and Hong Kong shares opened 2.2 percent higher.

Seoul shares gained 1.3 percent at the open after South Korea said it would guarantee up to 100 billion dollars on foreign borrowing by its banks and supply additional funds to ease a dollar shortage.

Investors cautiously welcomed US President George W. Bush's announcement that world leaders plan to hold a series of summits aimed at reforming the global financial system.

The proposed summits have "contributed to creating a climate in which investors can have positive expectations," said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC.

But he added: "Markets are still surrounded by uncertainty."

Governments have pumped billions of dollars into troubled banks in recent weeks while central banks have injected huge amounts of cash into money markets in an effort to keep credit flowing and prevent a financial system meltdown.

Dealers said that while stocks were much cheaper than just a few weeks ago, investors remained worried about the impact of the financial crisis on economic growth and corporate earnings.

"Markets are still on edge, and the fragile stability could easily be shattered," said analysts at RBC Capital Markets.

There are growing fears of recessions in the United States, Europe and Japan, while China reported Monday that its economic growth slowed to 9.0 percent in the third quarter of 2008.

In New York, the Dow Jones Industrial Average shed 1.41 percent on Friday at the end of another volatile week that saw the blue-chip index gain 4.7 percent after a 18 percent plunge the prior week.

On Sunday, the Dutch government announced that it would inject 10 billion euros (13.4 billion dollars) into banking giant ING.

The financial crisis also led to the ouster of the top brass at French bank Caisse d'Epargne following a 600-million-euro loss in derivatives trading earlier this month as world share markets were sliding.

On the foreign exchange market, the dollar rose to 101.75 yen in early Asian trade, up from 101.63 yen late Friday in New York. The euro rose to 1.3462 dollars from 1.3408.

-- Dow Jones Newswires contributed to this story. --



Date created : 2008-10-20