BUSINESS
11/10/2011 11:51 EST | Updated 01/10/2012 05:12 EST

Asian stocks rise after Italy bond yields cool down, Greece gets new leader

BANGKOK - Asian stock markets were mostly higher Friday following signs of progress in debt plagued Europe — a successful bond sale in Italy and the naming of a new leader in Greece.

Hong Kong's Hang Seng gained 0.9 per cent to 19,132.73 and South Korea's Kopsi added 1.7 per cent to 1,844.66. Australia's S&P/ASX 200 rose 0.7 per cent to 4,272.20. Benchmarks in Singapore, Taiwan, mainland China and New Zealand also rose.

After opening higher, Japan's Nikkei 225 index slipped 0.2 per cent to 8,487.50, a day after the index fell to a five-week closing low of 8,500.80.

For the most part, investors were calmed by news that Greece — which is struggling to pull back from the brink of bankruptcy — had named Lucas Papademos, a respected economist, as its new prime minister on Thursday.

An additional sign of stability came after Italy was able to borrow $6.8 billion at lower interest rates than analysts expected. On Wednesday, Italy's 10-year bond yields shot up alarmingly, stoking panic in financial markets that the country was heading toward a Greece-style debt crisis.

Traders have fretted that debt troubles in Italy and Greece could blow up into a massive liquidity crisis and lead to a global financial meltdown.

The European Union warned Thursday that the grouping of 17 nations that use the euro common currency could slip back into recession next year. The European Commission predicted the euro countries will grow a pallid 0.5 per cent in 2012 — much less than its earlier forecast of 1.8 per cent.

Europe has already bailed out Greece, Portugal and Ireland — but Italy is a much larger economy and its mountain of debt — $2.6 trillion (€1.9 trillion) — is far too massive for the continent to cover.

In Seoul, shares of SK Telecom Co., South Korea's top mobile carrier, rose 3.1 per cent after the company offered to buy a controlling stake in Hynix Semiconductor, Yonhap News Agency reported. Hynix shares gained 2.1 per cent.

Export shares in Japan continued to be weighed down by a strong yen which makes Japanese goods more expensive overseas. Mazda Motor Corp. fell 2.1 per cent, Toshiba dropped 2.2 per cent while Hitachi Ltd. lost 1.2 per cent.

In New York on Thursday, the Dow Jones industrial average rose 1 per cent to close at 11,893.86. It plunged 389 points Wednesday after Italy's borrowing rates soared and talks in Greece to name a new prime minister broke down.

Positive economic data from the U.S. also boosted hopes that the world's No. 1 economy would avoid a new recession.

The Labor Department reported that the number of people applying for unemployment benefits in the U.S. fell to 390,000 last week — the fewest since April. The data suggested layoffs are easing and that the economy grew slightly better over the summer than estimated.

The S&P 500 index gained 0.9 per cent to 1,239.70. The Nasdaq rose 0.1 per cent to 2,625.15.

In currency trading, the euro rose to $1.3620 from $1.3581 late Thursday in New York. The dollar fell to 77.56 yen from 77.66 yen.

Benchmark oil was down 19 cents at $97.59 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $2.04, or 2.1 per cent, to finish at $97.78 on Thursday.