Asian stock markets rose broadly on Friday after the European Commission said it would present proposals for a single supervisory mechanism soon to make use of eurozone's bailout funds to recapitalize the region's banks directly.
The EU leaders also approved a 120 billion-euro package to promote growth in the debt-stricken eurozone as well as across the broader 27-nation European Union and discussed ways to reduce the high borrowing costs faced by Spain and Italy. The EU vested on the Eurogroup the responsibility of implementing the decisions made at the summit by July 9, 2012.
Commodities rallied along with equities and the euro surged more than a percent against the dollar as the efforts at the crisis summit to save the European Union's single currency and support for action on growth surprised investors who had expected little progress from the summit.
Tokyo stocks rose amidst heavy trading, lifting the Nikkei average up 1.5 percent to a seven-week closing high, after the European summit pledged to support the EU growth pact. The broader Topix index also finished about 1.5 percent higher as appetite for risk returned.
European Union Council President Herman Van Rompuy said the European Commission will create a single supervisory body for euro zone banks, paving the way for regional banks to have direct access to the European Stability Mechanism without adding to government debt.
Bellwether exporters, especially automaker and tech shares, led the rally, as encouraging announcements from the EU summit led to a sell-off in the safe-haven U.S. dollar and the yen. Toyota Motor and Honda Motors gained about 3 percent each, Advantest rose 2.2 percent and Canon added 1.8 percent, but TDK lost 1.1 percent, extending declines for the ninth consecutive session on worries over weakening hard disk drive demand.
Drugmaker Takeda Pharmaceutical and Astellas rose 1-2 percent in the wake of U.S. Supreme Court's ruling on a federal health care overhaul yesterday. Brokerage Nomura Holdings soared 3.9 percent in reaction to news that the firm will cut its chief executive's pay and is considering a temporary halt to some operations as part of its efforts to resolve insider trading problems.
China's Shanghai Composite index rose 1.4 percent, with brokerages and insurers pacing the gainers, while Hong Kong's Hang Seng index jumped 2.2 percent.
Australian shares rose sharply after European leaders agreed to the bank recapitalization plan and a tighter union. Both the benchmark S&P/ASX 200 and the broader All Ordinaries index rose about 1.2 percent each. Resource stocks were among the best performers, with BHP Billiton, Rio Tinto and Newcrest climbing 2-3 percent. Among the major banks, ANZ rallied 2.5 percent and Westpac rose 1.5 percent, while Commonwealth and NAB gained about 0.9 percent each.
Department store David Jones jumped 14.6 percent as it announced the receipt of an unsolicited approach from U.K.-based EB Private Equity. Rival Myer climbed 5.9 percent and Billabong soared 5.4 percent. Shares of grocery wholesaler Metcash plunged about 10 percent after it successfully completed a $325 million capital raising to fund acquisitions.
South Korea's Kospi average rallied 1.9 percent, its largest single-day gain since June 7, and the won rose to a 7-week high against the dollar after eurozone leaders pledged to take action to bring down Italy's and Spain's spiraling borrowing costs. Non-life insurer Samsung Fire & Marine Insurance soared 4.6 percent after announcing a share buyback plan. Shinsung Solar Energy rallied 3.6 percent on winning an order to supply solar cells.
Shares of SK Hynix Inc., the world's second-largest memory chipmaker, closed up 2.4 percent. The company has launched a new production line at its plant in Chungju, 147 kilometers south of Seoul, that will churn out up to 40,000, 300 millimeter wafers per month. Hyundai Motor, the nation's largest automaker, eased 0.6 percent after its labor union walked out of wage talks with management and said it would vote next month on whether or not to go on a strike.
New Zealand shares edged down marginally, bucking the regional uptrend. The benchmark NZX-50 index slipped 1.5 points or 0.04 percent to 3,3400. Rural services firm PGG Wrightson paced the declines, tumbling 6.5 percent, Australian food ingredient firm Goodman Fielder lost 2.8 percent, Freightways, the express package and information management company, declined 1.6 percent, miner OceanaGold slipped 1.3 percent and national carrier Air New Zealand ended down 1.2 percent, while investment holdings company Guinness Peat Group and insurer Tower rose about 2 percent each.
Among heavyweight stocks, Telecom shed 0.4 percent, Contact Energy eased 0.6 percent and Fletcher Bulding lost a percent. Property stocks gained ground, with Goodman Property Trust and Kiwi Income Property Trust closing up about half a percent each.
Elsewhere, India's benchmark Sensex was last trading up 2.4 percent after the government said the taxman will not invoke the much criticized GAAR provisions against Participatory Note (P-Note) holders.
Indonesia's Jakarta Composite index was up 1.8 percent, Malaysia's KLSE Composite rose a modest 0.3 percent, Singapore's Straits Times index was gaining 1.2 percent and the Taiwan Weighted average added 1.8 percent.
On Wall Street, stocks saw significant weakness before ending modestly lower overnight, as investors reacted negatively to the Supreme Court's decision to uphold President Obama's healthcare reform law, including the law's individual insurance mandate.
Lingering concerns about the financial situation in Europe also weighed on markets as EU leaders gathered for a two-day summit to find a solution to prevent the debt crisis from escalating. The tech-heavy Nasdaq underperformed its counterparts, ending the session down 0.9 percent, while the Dow and the S&P 500 slid about 0.2 percent each.
by RTT Staff Writer
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