Asia markets up on Greece, US hopes but Shanghai sinks again

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HONG KONG: Asian markets tracked global stocks higher on Thursday on hopes for a deal to keep Greece in the eurozone as the country prepares for a crucial weekend referendum, but Shanghai tumbled again despite authorities relaxing trading rules to temper recent volatility.

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Regional traders were broadly upbeat on the prospects for Greece despite Tuesday’s default as the government offered fresh concessions to reach a compromise.

Buying was also supported by a healthy pick-up on Wall Street that came after another strong batch of US data suggesting the world’s top economy is on the recovery path.

Tokyo added 0.95 percent, helped by a weaker yen. The Nikkei added 193.18 points to 20,522.50.

Sydney put on 1.53 percent, or 84.14 points, to close at 5,599.80 and Seoul gained 0.45 percent, or 9.44 points, to 2,107.33. Hong Kong closed 0.12 percent higher, adding 32.29 points to 26,282.32.

Shanghai suffered another afternoon sell-off to plunge 6.4 percent at one point, extending Wednesday’s more than five percent slump as investors brushed off the latest measures to temper a sell-off that has put the index into bear territory.

However, the benchmark recovered marginally to end 3.48 percent, or 140.93 points, down at 3,912.77—it has now lost a quarter of its value since hitting a June 12 peak.

While European leaders dismissed Wednesday an offer from Greece for a new bailout—which had been presented just before it defaulted—traders are confident the crisis will eventually be resolved.

Frustrated eurozone finance ministers agreed to wait until after Sunday’s bailout referendum before holding any more talks, saying there were “no grounds” for further discussions.

The poll has been cast by Europe’s leaders as effectively an in/out vote on the country’s future on the euro.

“Markets seem to be of the opinion that post referendum, some agreement will be reached,” Con Williams, an agricultural economist in Wellington at ANZ Bank New Zealand Ltd., wrote in a client note, according to Bloomberg News.

On Thursday Greek Finance Minister Yanis Varoufakis said the country’s anti-austerity government “may very well” resign if the country votes for the proposals.

US and European shares advanced Wednesday. On Wall Street the Dow rose 0.79 percent, the S&P 500 was up 0.69 percent and the Nasdaq put on 0.53 percent.

Paris, Frankfurt and Milan each advanced more than two percent, while Madrid and London clocked up more than one percent. Athens is closed until next week owing to capital controls imposed last weekend.

Dollar picks up
US investors were also on a high after a gauge of manufacturing activity came in June at its highest level in five months, while a survey of private job creation was at its strongest this year.

Focus is now on the release of non-farm payrolls later Thursday, which is expected to back up views that the economy is gaining strength.

The figures will also firm expectations that the Federal Reserve will raise interest rates, possibly in September, pushing the dollar up.

The dollar was at 123.54 yen, up from 123.15 yen in New York and much stronger than the 122.48 yen in Tokyo earlier Wednesday.

The euro fetched $1.1056 and 136.59 yen, against $1.1053 and 136.12 yen in New York.

Chinese markets again saw sharp swings as they suffer a sharp correction after surging more than 150 percent over the past year.

Both Shanghai and Shenzhen have since fallen into bear market territory, with the losses largely attributed to fears stocks were overvalued, profit-taking and margin traders unwinding their positions.

After Wednesday’s plunge the China Securities Regulatory Commission said it would ease rules on trading, while the two exchanges cut their fees.

However, the move had little effect and Simon Male, head of Asian equities sales at Auerbach Grayson & Co. in New York said it would not “be enough to stabilize the market.”

And Chen Xingdong, Beijing-based chief economist at BNP Paribas, told Bloomberg News: “When investors lose confidence and rush to sell, these short-term measures will be hardly sufficient to stop the rout.”

On oil markets US benchmark West Texas Intermediate for August delivery was up 13 cents at $57.09 while Brent was 36 cents higher at $62.37.

Gold fetched $1,165.05 compared with $1,172.54 late Wednesday.

AFP

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