Asian markets cautiously optimistic over Greece

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HONG KONG: Asian markets on Monday were cautiously optimistic after news from Europe that there could be light at the end of the tunnel for Greece's crippling debt crisis.

After seven hours of crunch talks aimed at averting Greek default -- and the possible domino effect across their shared currency area -- eurozone finance ministers told Greece they and the IMF would release 12 billion euros of loans in "mid-July".

Athens has struggled under the weight of huge debts and rocketing bond prices, with continued talk of its inability to pay further worsening the situation and sending jitters around the financial world.

But the carrot comes with a heavy stick -- revolting Greek lawmakers must endorse stringent austerity measures aimed at reining in profligate state spending, or lose the cash.

European ministers also agreed on a roadmap for a second, 100-billion-euro ($156 billion) bailout, which would involve taxpayers' money but also a "substantial" contribution via the "informal and voluntary rollovers of existing Greek debt at maturity" by private banks, pension funds and insurers.

The development provided a cautious Asia with a reasonable start to the day.

Tokyo rose 0.34 percent, Sydney was 0.11 to the better and Hong Kong was 0.60 percent higher.

Shanghai -- where the focus was on the rising value of the yuan -- fell 0.25 percent, with exporters hit over fears that their products will become more expensive as the local currency strengthens.

"All eyes remain on Greece but news this morning that the Eurogroup's final decision on the country's second bailout package has been delayed until early July will result in more uncertainty filtering through markets," Credit Agricole said in a note.

"Consequently the tone this week is likely to be cautious, with risk aversion remaining elevated."

Markets worry a default on Greek debt could trigger a cascade of problems in Europe's bigger economies, including Spain. Such a domino effect could again hobble the global financial system, much like the massive crisis of 2008.

Showing the extent of international fears over renewed financial contagion, G7 finance ministers from Britain, Canada, France, Germany, Italy, Japan and the United States held a late-night telephone conference to discuss the Greek debt crisis.

Local markets got a boost from a positive day on Wall Street on Friday, where the Dow Jones Industrial Average climbed 0.36 percent and the S&P 500 index rose 0.30 percent.

The recent drop in the price of oil was seen as giving a fillip to the beleaguered US consumer.

The overall downward trend for oil continued Monday in Asian trade with New York's main contract, light sweet crude for delivery in July, falling 31 cents to $92.70 per barrel.

Brent North Sea crude for August delivery shed 58 cents to $112.63.

Forex traders were unconvinced by the bailout talk, citing uncertainty until the mid-July payout is made to Greece.

The euro fell to $1.4276 in Tokyo morning trading from $1.4301 in New York late Friday. The European single currency also sagged to 114.32 yen from 114.46 yen.

Gold opened in Hong Kong at $1,539.50-$1,540.50 an ounce, up markedly from Friday's close of $1,524.00-$1,525.00. (AFP)