Tags: World | Markets | asia | greece

Asia Stocks Up After Greece Drops Referendum Plan

Thursday, 03 Nov 2011 11:54 PM

BANGKOK — Asian stock markets rose sharply Friday, a day after Greece's prime minister abandoned a referendum on the country's bailout and the European Central Bank cut interest rates in a surprise move.

Japan's Nikkei 225 index rose 1.3 percent to 8,750.76 and Hong Kong's Hang Seng jumped 3.1 percent to 19,840.45. South Korea's Kospi gained 2.8 percent to 1,921.94.

The gains reversed four straight days of losses starting Monday. That's when Greek Prime Minister George Papandreou shocked financial markets by unexpectedly announcing he would call a referendum on a European austerity plan aimed at restoring the country's solvency.

But markets remain jittery about how Europe will resolve its debt crisis. The risks to the region's economy were also a clear factor in the ECB's surprise decision Thursday to cut interest rates by a quarter of a percentage point to 1.25 percent.

Some analysts expect economic growth in Europe to slow in the final three months of the year or even go into reverse.

The developments Thursday helped send Wall Street to a second day of big gains. The Dow Jones industrial average gained 1.8 percent to 12,044.47. The S&P 500 rose 1.9 percent to 1,261.15 and the Nasdaq composite added 2.2 percent to 2,697.97.

Reports on the U.S. economy also lifted stocks by lowering fears of a new recession. The number of people who applied for unemployment benefits last week dipped to the lowest level in five weeks. The number of applications fell below 400,000 for only the third time since April. Companies also made more orders to U.S. factories in September.

Benchmark crude for December delivery was down 9 cents to $93.98 in electronic trading on the New York Mercantile Exchange. The contract rose $1.56 to settle at $94.07 a barrel on Thursday, helped by the better U.S. and European news.

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