HONG KONG (AFP) -The euro extended its gains against the dollar Tuesday while most Asian equities climbed on hopes Greece’s new government will be able to negotiate a bailout deal with the EU and IMF that will avoid it leaving the eurozone.
Regional dealers were given a lift from advances in Europe and New York, where news of Sunday’s Greek election win for anti-austerity party Syriza had been largely factored in, analysts said.
However, Hong Kong and Shanghai suffered heavy selling on profit-taking after rallying over the past week.
Tokyo rallied 1.72 per cent, or 299.78 points, to 17,768.30, Sydney added 0.82 per cent, or 45.38 points, to close at 5,547.2 and Seoul rose 0.86 per cent, or 16.72 points, to close at 1,952.40.
But Shanghai fell 0.89 per cent, or 30.22 points, to 3,352.96 and Hong Kong eased 0.41 per cent, or 102.62 points, to 24,807.28.
Shanghai had rallied more than eight per cent since last Monday, when it plunged 7.70 per cent in response to a government crackdown on margin-trading.
Markets have been buoyed by rhetoric coming out of Athens and its creditors that raises hopes the two sides can reach an agreement over Greece’s repayment of its 240-billion-euro bailout.
Syriza had campaigned on renegotiating terms of the lifeline – which included swingeing spending cuts and painful tax hikes – and there are concerns it will default on its repayments, leading to its possible exit from the eurozone.
But International Monetary Fund head Christine Lagarde said she was prepared to continue its financial support to the country, while some European finance ministers suggested they were willing to talk, as long as Syriza did not demand its debt be wiped out.
The messages coming out of Europe helped shares higher. In Europe, equities in London, Paris and Germany all closed with healthy gains, although Athens lost more than three per cent.
Dow edged 0.03 per cent higher, the S&P 500 added 0.26 per cent and the Nasdaq put on 0.29 per cent.
“The Greek elections had the potential to unnerve the market,” Nader Naeimi, at AMP Capital Investors in Sydney, told Bloomberg News.
“It’s quite encouraging that the new government and the EU are willing to negotiate. The market is in a risk-on mode.”
And Gavin Parry, managing director of Parry International Trading, added: “Concerns have eased that the anti-austerity policies of the new government will force Greece to exit the eurozone.”
The euro plunged to as low as $1.1098 at one point in Asia Monday, the lowest level since September 2003, before recovering later in the day to close out in New York at $1.1234.
On Tuesday in Asia it bought $1.1250.
It also sank to 131.55 yen Monday in Asia before bouncing to end the day at 133.12 yen. It bought 132.90 yen in Tokyo Tuesday.
The dollar edged down to 118.11 yen from 118.49 yen in US trade.
Oil prices slipped despite a warning from the OPEC cartel that prices could punch $200 owing to shrinking investment in exploration.
US benchmark West Texas Intermediate for March delivery fell 10 cents $45.05 while Brent crude for March eased 12 cents to $48.04.
Gold fetched $1,278.96 an ounce, against $1,281.39 late Monday.