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Business News

Asia stocks rise after Cyprus deal


A last-minute package of rescue loans that saves Cyprus from a banking collapse and bankruptcy helped push Asian stock markets higher today.

Depending on the deal's details, "the outcome will mean that the risks of Cyprus defaulting and leaving the euro zone will have significantly diminished," said analysts at Credit Agricole CIB in Hong Kong in a market commentary.

Japan's Nikkei 225 index surged 1.9% to 12,567.07. Australia's S&P 500 added 0.5% to 4,993.20. South Korea's Kospi jumped 1.4% to 1,975.33. Stocks in mainland China fell.

Hong Kong's Hang Seng rose 0.7% to 22,272.68, although trading volume was somewhat thin.

Linus Yip, strategist at First Shanghai Securities in Hong Kong, said the market was being cautious ahead of the release of earnings from the Industrial and Commercial Bank of China, the Agricultural Bank of China and Bank of China this week.

"Chinese banking players will report, so the market is maybe taking a wait-and-see attitude," he said.

Banking shares in other markets posted strong gains, evidence of relief amid the financial sector for the Cyprus bailout.

South Korea's Shinhan Financial Group jumped 5.3%. Japan's Nomura Holdings advanced 1.9%. Australia's Westpac Banking Corp. added 1.7%.

The deal should bring a rally when US stock markets open today, according to investment managers.

US investors will not care too much about who takes losses in Cyprus, as long as there is a bailout that stops the run on banks and keeps the eurozone stable, said Karyn Cavanaugh, market strategist at ING Investment Management in New York.

"If this works out, regardless of the terms, this is going to be good for the market," she said.

The move should be well received by US investors because it's the third bailout deal in the eurozone, including Greece and Spain, and in each case the countries have agreed to austerity plans.

The Dow Jones industrial average dropped more than 90 points on Thursday in part on fears that the crisis in Cyprus would intensify, but it rebounded and erased the loss on Friday.