Asian stocks rose broadly on Wednesday, although the undertone remained weak ahead of a critical European summit starting Thursday. With Germany staunchly opposing joint liability among eurozone member states to share the region's debt burden, expectations for the European meeting remain low.
Commodities edged lower in volatile trading and the euro was flat against the dollar, with Italy in the spotlight ahead of a 6-month debt auction today and 5- and 10-year debt auctions tomorrow. Spanish and Italian bond costs surged at auctions on Tuesday after Moody's cut its credit ratings on 28 Spanish banks, citing the nation's sovereign debt and banks' exposure to commercial real estate.
European Council President Herman Van Rompuy on Tuesday released a seven-page report outlining proposals to enhance the existing power of the Union by enforcing tighter fiscal integration with budget controls across the eurozone and establishing a European banking union.
"I don't see total debt liability as long as I live," German Chancellor Angela Merkel reportedly told a closed-door meeting of lawmakers in her coalition as the bloc's big four finance ministers met to bridge differences over how to resolve the eurozone debt crisis.
Tokyo stocks rose notably, snapping a three-day losing streak, with a positive close on Wall Street overnight on the back of better-than-expected housing data and gains in regional markets offering support. The Nikkei average rose 0.8 percent in thin trading, while the broader Topix index gained 0.9 percent.
Real estate and construction sectors led the gainers, with Sumitomo Realty & Development, Mitsui Fudosan and Sekisui House rallying about 3 percent each on expectations of a boost in demand before the first increase in sales tax takes effect in 2014.
Domestic demand-linked Softbank soared 4 percent on expectations of growth in its solar energy business, retailer Seven & i Holding advanced 2.7 percent and IT services company NTT Data Corp rose 2.6 percent, while exporters such as Toyota Motor, Sony, Canon and Suzuki Motor ended down between 0.5 percent and 1.7 percent, pressured by the yen's prolonged strength.
China's Shanghai Composite index slipped 0.2 percent, extending declines for a sixth trading session despite speculation the government may announce additional stimulus to spur economic growth. Hong Kong's Hang Seng index added a percent after the official Xinhua News Agency said the government plans to push forward joint ventures between the stock exchanges in Hong Kong, Shenzhen and Shanghai, and encourage more exchange-traded funds that track mainland and local stocks.
Australian shares snapped a four-day losing streak, as upbeat U.S. housing market data and reports that U.S. congressional leaders are considering whether to delay automatic federal spending cuts until March 2013 spurred bargain hunting in beaten-down stocks ahead of the European Union summit. Both the benchmark S&P/ASX 200 and the broader All Ordinaries index rose about 0.7 percent each.
Banks led the gainers, with ANZ, Commonwealth, NAB and Westpac rising about a percent each. Miners ended down, with BHP Billiton down a modest 0.1 percent and Rio Tinto down half a percent, while gold miner Newcrest lost 1.8 percent. In a statement, BHP said today that it is targeting significant growth in copper production at Chilean mine Escondida in the June quarter. Rio, meanwhile, said it has sent off the first coal shipment from its Benga mine in the Moatize Basin in Mozambique's Tete province.
Building products maker Boral fell 1.9 percent after it issued another profit warning, citing bad weather and delays to major construction projects. News Corp. rallied 3.4 percent after the company said it was considering splitting the $53 billion media company.
Seoul shares erased early losses to end on a flat note. The benchmark Kospi average eased 0.15 points or 0.01 percent to finish at 1,817.65 as investors seemed reluctant to make risky bets ahead of the EU crisis summit. Automakers paced the declines, with Hyundai Motor and Kia Motors tumbling over 3 percent each, while heavyweight Samsung Electronics rallied 2.5 percent on bargain hunting following steep declines in recent sessions.
New Zealand shares rose modestly, with the benchmark NZX-50 index rising 0.2 percent, after NZ Oil & Gas indicated a likely upgrade to reserves at the Kupe field for the first time since 2010. Shares of the Wellington-based oil explorer climbed 3.9 percent, while construction company Fletcher Building dropped 1.5 percent to a fresh three-year low in reaction to Australian building company Boral's full-year profit downgrade for the second time in three months.
NZ Refining tumbled 4.6 percent on concerns over weak refining margins. Online auction site Trade Me lost 1.1 percent after an attempt by an online dealer to fix the price of bullion sold on the website last year elicited a warning from the Commerce Commission.
Elsewhere, India's benchmark was up 0.2 percent, Indonesia's Jakarta Composite index was rallying 1.4 percent, Malaysia's KLSE Composite rose half a percent, Singapore's Straits Times index was up 1.4 percent and the Taiwan Weighted average advanced 0.6 percent.
On Wall Street, stocks ended modestly higher on Tuesday, as signs that the recovery in the U.S. housing market is gaining traction helped offset negative news concerning another decline in consumer confidence in June. The Dow rose 0.3 percent, the tech-heavy Nasdaq gained 0.6 percent and the S&P 500 added half a percent.
by RTT Staff Writer
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