HONG KONG: Asian markets rose Wednesday and Italian bond yields fell from record highs after Italian leader Silvio Berlusconi promised to quit, lifting hopes Rome can avoid being ravaged by Europe's debt crisis.
Adding to buying sentiment was data out of China showing that the country's inflation had slowed sharply last month, raising the prospect that the government could start to ease monetary policy.
Tokyo was 0.94 percent higher by the break, Hong Kong jumped 2.01 percent, Sydney added 1.37 percent, and Seoul gained 0.35 percent.
Berlusconi's hand was forced after his coalition lost its parliamentary majority in a procedural vote on budgetary legislation. The 75-year-old prime minister said he would step down once a key austerity budget has been passed.
The yield on 10-year Italian bonds fell to 6.65 percent in Asian hours, well down from the record 6.77 percent seen before his announcement.
"Risk appetite is improving, with investors favouring cyclicals over defensives amid relief that Berlusconi is stepping down," said CBA institutional equities head of sales Justin Rooney in Sydney.
Markets have been punishing Italy for weeks over what is seen as Rome's inability to make necessary changes to balance the budget and keep on top of its debt mountain, which is equal to 120 percent of gross domestic product.
However, Credit Agricole warned in a note that with yields still "dangerously close to the 7 percent level", the euro will stay under pressure and markets on edge until political deadlock in Italy and Greece is resolved.
Berlusconi's move came days after George Papandreou, the Prime Minister of debt-weary Greece, said he would step aside and allow a unity government to take over in a bid to drag the country out if its financial mess.
In early Asian trade Wednesday the euro bought $1.3837 flat from New York overnight, but up from $1.3773 at the same time Tuesday. It was also flat at 107.50 yen compared with New York but up from 107.24 yen the day before.
The dollar was at 77.60 yen, down from 77.70 in New York. It bought 78.03 in Asia Tuesday.
The news from Rome sent Wall Street into positive territory after it spent the day in the red. The Dow rose 0.84 percent, the Nasdaq added 1.20 percent and the S&P 500 added 1.17 percent.
Beijing said Wednesday morning that its consumer price index -- a key gauge of inflation -- rose 5.5 percent year-on-year, its slowest pace since May, after more than a year of monetary tightening measures.
The figure is well down from the three-year high of 6.5 percent posted in July, and boosted hopes the government will ease up on liquidity restrictions.
However, Shanghai shares were 0.35 percent lower by the break as profit-takers moved in after earlier gains.
On oil markets New York's main contract, light sweet crude for delivery in December, rose 26 cents to $97.06 per barrel.
Brent North Sea crude for December gained 49 cents to $115.49.
At 0350 GMT gold was at $1,791.90 an ounce against $1,795.30 late Tuesday.
Comments
Comments are closed for this article.