Asian shares were mixed yesterday after starting on a high in response to a Franco-German pact to support Europe’s banks, while US jobs data also supplied some unexpected good news.
Dealers remained cautious after Wall Street finished last week with a loss and Fitch Ratings Ltd downgraded Italy and Spain’s debt ratings.
Sydney closed 0.92 percent, or 38.1 points, higher at 4,201.0 after adding 3.8 percent last week — its biggest weekly gain in more than a year, while Seoul closed 0.38 percent, or 6.67 points, up at 1,766.44.
Singapore added 0.61 percent in the afternoon.
However, Hong Kong, which surged about 9 percent in the previous two sessions, ended flat, while Shanghai closed down 0.61 percent at their lowest level since April 2009 in the first trading day after the week-long Golden Week holiday.
In other markets, Manila ended 0.78 percent higher and Willington closed 0.32 percent lower. Taipei and Tokyo were closed for public holidays.
European stock markets edged upward yesterday as investors gave a cautious welcome to a Franco-German pact to support Europe’s troubled banking sector.
In initial deals, London’s benchmark FTSE 100 added 0.27 percent to 5,317.54 points, Frankfurt’s DAX 30 gained 0.52 percent to 5,705.40 points and in Paris the CAC 40 rose 0.84 percent to 3,121.41 points.
French President Nicolas Sarkozy and German Chancellor Angela Merkel put on a united front on Sunday and vowed after talks in Berlin a response to Europe’s debt crisis within weeks.
Without announcing concrete details, Sarkozy said there would be “lasting, global and quick responses before the end of the month,” amid rampant fears of a crippling credit crunch.
Also on Sunday, Belgium and Luxembourg said they had reached a deal to dismantle troubled bank Dexia SA, the first victim of the eurozone crisis.
Belgium’s finance minister said Brussels had, in accordance with French wishes, agreed to guarantee 60 percent of the so-called “bad bank” assets, compared with 36.5 percent for France and 3.5 percent for Luxembourg.
The news from Europe added to the upbeat data from the US, which showed the economy created a better-than-expected net non-farm 103,000 jobs last month.
The US Department of Labor also revised upward the two previous months’ job creation numbers, indicating that employment in the faltering economy had more momentum than previously believed.
The July payrolls totaled 127,000, not the 85,000 initially estimated, while August was revised from zero to 57,000.
However, Wellington-based ANZ Group Ltd bank strategists said in a note: “Some optimists are hailing an end to the risk of recession for the US, but given this data is volatile and prone to large revisions, we’ll not make any significant judgements from one outturn.”
However, putting downward pressure on markets was Fitch’s decision on Friday to cut it ratings on Italy and Spain, citing the increasing pressure on them as the eurozone crisis makes it harder for them to raise cash.
“The downgrade reflects the intensification of the eurozone crisis that constitutes a significant financial and economic shock which has weakened Italy’s sovereign risk profile,” Fitch said.
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