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Asian stock markets rally, looking west wistfully
Tuesday 25 10 2011 03:53:39
Stock markets rallied strongly across Asia yesterday on hopes that a new plan to stop the sovereign debt crisis in Europe from spiralling out of control could be announced tomorrow.
Investors also took what comfort they could from new economic data suggesting that China's economy is still humming along, rather than slowing sharply, despite recent measures taken by the government to tame inflation.
European leaders meeting in Brussels on Sunday said that they were close to agreement on a plan that is expected to focus on recapitalising European banks, writing down the value of Greece's debt and using leverage to extend the reach of the eurozone's 440 billion euro (S$777 billion) bailout fund.
But European leaders appeared to have abandoned their earlier insistence that Greece would not need to default on its debts, even as many analysts warned that default was inevitable.
Instead, some of the most heated discussions are now centred on how large a loss the private-sector holders of Greek government debt will be expected to stomach. Reports yesterday suggested that the losses could be as high as 60 per cent, but banks and other financial institutions that hold the bulk of Greek government debt are arguing for smaller write-downs.
In Asia, most major stock benchmarks ended sharply higher yesterday.
Investors in Asia got a welcome boost from news that manufacturing activity in China likely rebounded in October, according to the latest reading of the China purchasing managers' index (PMI) published monthly by HSBC.
The index rose to 51.1 in October from 49.9 in September - the first time it has exceeded 50 (indicating that the sector is expanding) since June, according to a preliminary reading of the PMI.
Source: Business Times – 25 October 2011
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