Asian stocks climbed on Monday, as news that Spain has agreed to accept a bailout for its cash-starved banks and better-than-expected Chinese trade data released this weekend improved appetite for risk. Commodities rallied and the euro rose against the dollar and yen on expectations the Spanish bailout will lessen the risk of contagion from the region's debt crisis.
Spain on Saturday agreed to accept a bailout for its struggling banks as European finance ministers offered an aid package of up to 100 billion euros or $125 billion to save its banks. Spanish prime minister Mariano Rajoy repeatedly said that the rescue package is simply a line of credit that its most troubled banks will be able to tap, meaning Spain would avoid a full bailout. Spain is the fourth euro nation to seek a bailout after Greece, Portugal and Ireland.
Focus is also returning to Greece slowly as the nation heads for a second round of elections on June 17 after a May 6 election failed to produce a definite winner. While recent opinion polls contradicted each other on the election outcome, it was observed that most Greeks want to see the terms of bailout revised. The outcome of the election would determine whether Greece will continue to stay in the euro zone.
Japanese shares rose sharply in thin trading, as easing concerns over an escalation of the European debt crisis, the yen's weakness and slowing inflation in China spurred a broad-based short-covering rally. The Nikkei average jumped 2 percent following Friday's 2.1 percent retreat, while the broader Topix index added 1.7 percent.
Beaten-down export-linked shares such as Tokyo Electron and Sharp rebounded 5-8 percent, while China-linked Komatsu and Hitatchi Construction Machinery rallied about 4 percent each. Honda Motor and Nissan Motor rose 3-4 percent, TDK soared 4.8 percent and Pioneer jumped 5.3 percent. Silicon wafer maker Sumco soared 14 percent after reporting strong earnings results for the February-April quarter, while rival Shin-Etsu Chemical advanced 3.2 percent.
Renesas Electronics plunged 9.8 percent on reports that the chipmaker has abandoned its plan to seek a capital injection and instead asked its major shareholders to provide loan guarantees. Likewise, Olympus tumbled 4.1 percent as the scandal-hit optical equipment maker announced plans to cut around 2,700 jobs in two years and streamline non-core operations to bolster its finances.
China's Shanghai Composite index added 1.1 percent after a slew of data released over the weekend assuaged growing fears of a hard landing. While inflation slowed substantially in May, industrial output grew at a slower-than-expected pace, giving Beijing additional room to loosen policy and stimulate growth. Also, trade data beat gloomy market expectations, providing a glimmer of hope for the global economy. Hong Kong's Hang Seng index climbed 2.4 percent, posting its biggest one-day percentage gain since January 17.
South Korea's Kospi average rallied 1.7 percent to a near four-week high on easing worries over Spain's banking sector. Battered oil refiners paced the gainers, with S-Oil, GS Holdings and SK Innovation climbing 4-7 percent, after crude futures rose more than $2 a barrel in Asian trading Monday boosted by data showing robust Chinese crude imports in May.
Economy-sensitive shipbuilders also rallied, with Hyundai Heavy, Samsung Heavy Industries and Daewoo Shipubilding gaining 4-6 percent. Chip maker SK Hynix soared 6 percent after the company signed an agreement with IBM to jointly develop phase-change RAM chips and license relevant technology.
New Zealand shares eked out modest gains in quiet trading in the absence of trading cues from across the Tasman. The benchmark NZX-50 index rose 0.1 percent, with construction firms Fletcher and Steel & Tube leading the gainers, ending up 2.3 percent and 2.8 percent, respectively. Skellerup Holdings, the rubber goods and milking equipment manufacturer, rose 1.5 percent after the company shifted its chief financial office Guy Keogh to a new role in its agri division.
Lines network and gas distributor Vector fell 1.1 percent after it signed contracts to provide natural gas to Fonterra Cooperative Group, New Zealand Steel and MightyRiverPower starting this year. Gold miner OceanaGold paced the declines on the exchange, tumbling 4.3 percent, rural services firm
PGG Wrightson lost 3.2 percent, whiteware manufacturer Fisher & Paykel Appliances fell 1.8 percent, exchange operator NZX shed 1.6 percent and phone company Telecom eased 0.2 percent.
Elsewhere, India's benchmark Sensex was last trading up a modest 0.1 percent, while Indonesia's Jakarta Composite index rose 1.1 percent, Malaysia's KLSE Composite gained half a percent, Singapore's Straits Times index was up 1.8 percent and the Taiwan Weighted average added 1.7 percent. The Australian market was closed for a public holiday.
On Wall Street, stocks rebounded from early losses to end on a firm note Friday , boosted by reports that Spain will request aid from Europe during the weekend. The Dow and the S&P 500 rose about 0.8 percent each, while the tech-heavy Nasdaq added a percent.
by RTT Staff Writer
For comments and feedback: email@example.com