Asian shares rise on US debt plan hopes

HONG KONG: Asian stocks rose on Wednesday after US President Barack Obama threw his weight behind a plan to slash the country's deficit that could see the country avoid a devastating default.

Tech firms were boosted by strong earnings reports from US giants Apple and IBM while the new confident mood saw dealers shift away from safe-haven assets, sending the price of gold down from record highs.

Hong Kong gained 0.48 percent, Tokyo rose 1.34 percent by the break and Sydney added 1.68 percent while Shanghai climbed 0.22 percent and Seoul jumped 1.25 percent.

Obama highlighted a new plan by a bipartisan "Gang of Six" senators that aims to slash the US budget deficit by about $3.7 trillion over 10 years and boost revenues $1 trillion by closing tax loopholes and ending some tax breaks.

He called the framework "broadly consistent" with his call to cut spending including on the US military, overhaul cherished social safety net programmes, and raise taxes on the rich to ensure "shared sacrifice".

Obama said he would call up top congressional leaders, after a House vote late in the day, to set up a new round of White House negotiations and expressed hope for a breakthrough "in these next couple of days".

However, he warned that the plan faced several hurdles and plenty of work was still needed before a final deal that will allow the debt ceiling to be raised.

Lawmakers must find an agreement by August 2 or else Washington will likely miss out on its repayment obligations, sending it into default, which would have seismic ripples around the global economy.

Obama has described such a scenario as "Armageddon".

On Wall Street the Dow rose 1.63 percent, while the broader S&P 500 also jumped 1.63 percent and the tech-heavy Nasdaq soared 2.22 percent.

US sentiment was lifted by IBM after it reported net income rose eight percent to $3.7 billion in the second quarter.

After the US market closed Apple said net profit surged 125 percent and revenues jumped 82 percent on the back of huge sales of iPhones and iPads.

Those figures boosted Asian tech firms. In Seoul, LG Display rose 4.1 percent and Samsung Electronics was up 2.8 percent, while in Tokyo Softbank -- which provides iPhone and iPads in Japan -- added 2.4 percent.

The more buoyant mood supported the euro, which edged up on US debt hopes late Tuesday.

The European unit was up at $1.4161 in Tokyo morning trade from $1.4150 in New York overnight and much higher than the $1.4090 in Asia on Tuesday.

It was also at 112.07 yen from 112.01 yen in New York but well up from 111.36 Tuesday in Asia.

The dollar traded at 79.12 yen, from 79.21 yen.

In Sydney, Rupert Murdoch's News Corp soared in early trade a day after he told British lawmakers he was not to blame for the phone hacking scandal that has rocket his empire and led to the closure of one of his newspapers.

The stock opened 4.8 percent higher but by late morning it had eased to be three percent higher at Aus$14.94.

The firm's shares rallied 5.51 percent in New York to end at US$15.79.

Gold opened at $1,588.50-$1,589.50 an ounce in Hong Kong, down from Tuesday's close of $1,608.00-$1,609.00.

The precious metal passed $1,610 in London Tuesday as dealers bought it for its safe-haven status but easing concerns over the US deficit have seen them look for riskier assets.

On oil markets, New York's main contract, light sweet crude for August delivery advanced 80 cents to $98.30 a barrel and Brent North Sea crude for September delivery was 69 cents higher at $117.75.

Copyright AFP (Agence France-Presse), 2011