Asian markets climb as EU moves to defend euro

SINGAPORE — Asian stock markets climbed yesterday as the European Union (EU) agreed on a nearly $1 trillion defense package for the embattled euro, hoping to contain global fallout from Greece’s debt problems and protect its common currency.

Japan’s Nikkei 225 stock average rose 1.5 percent to 10,523.61, and Hong Kong’s Hang Seng index jumped 1.3 percent to 20,187.59. Other major benchmarks in the region advanced as relieved investors began buying after big declines last week.

The euro traded at $1.2903, up from the 14-month low of $1.2523 it hit late last week while stock futures suggested Wall Street would welcome the euro defense plan. Dow futures climbed 246 points, or 2.4 percent, to 10,581.

Under the three-year plan, the EU Commission will make 60 billion euro ($75 billion) available while countries from the 16-nation eurozone would promise bilateral backing for 440 billion euro ($570 billion). The IMF would contribute an additional sum of at least half of the EU’s total contribution, or 250 billion euro, Spanish Finance Minister Elena Salgado said.

The Federal Reserve followed by opening a program to ship US dollars to Europe in a move to head off a broader financial crisis on the continent. Other central banks, including the Bank of Canada, the Bank of England, the European Central Bank, the Bank of Japan and the Swiss National Bank, are also involved in the effort.

Some analysts said the measures may not bolster investor confidence in the creditworthiness of all European countries, and there could be more speculative attacks on the debt and currencies of nations with weak finances.

“The bond market vigilantes are still hungry, they smell blood,” said David Cohen, an economist with Action Economics in Singapore. “This package is trying to short circuit that process but it could be like the 1997-1998 Asian crisis where countries were attacked one by one.”

Early Saturday, the eurozone leaders gave final approval for an 80 billion euro ($100 billion) rescue package of loans to Greece for the next three years to keep it from imploding. The International Monetary Fund also approved its part of the rescue package – 30 billion euro ($40 billion) worth of loans – in Washington on Sunday.

Together, the IMF and EU bailouts give Greece enough money to avoid having to raise private funds for two years, IMF officials said.

China’s benchmark stock index broke from the regional trend yesterday, falling 0.1 percent after the country said exports surged 30.5 percent over a year earlier and imports jumped 50 percent. Investors speculated signs of a booming economy could lead policymakers to implement more measures to tighten monetary policy and cool surging property prices.

In New York on Friday, the Dow Jones industrials closed down 1.3 percent, at 10,380.43.

The dollar rose to ¥92.69 from ¥92.37 late Friday.

Benchmark crude for June delivery was up $2.05 to $77.16 a barrel in electronic trading on the New York Mercantile Exchange. The June contract fell $2 to settle at $75.11 on Friday.