Asia shares rise on progress in euro zone rescue

TOKYO: Asian shares rose on Thursday on growing hopes that Europe is taking concrete steps to contain the region's debt woes and head off a systemic banking crisis.

Strengthening investor confidence in the euro zone underpinned the single currency, while receding concerns about the banks' problems threatening the wider financial system sharply tightened Asian credit markets.

MSCI's broadest index of Asia Pacific shares outside Japan rose 0.6 percent, following a 1.4 percent gain in the MSCI world equity index , which posted an increase for the sixth session in a row on Wednesday.

The Nikkei average opened up 1.07 percent on Thursday. On Wall Street, the benchmark S&P 500 stock index compiled a gain of 9.8 percent over the past seven sessions, its steepest advance since mid-March 2009.

The euro stayed bid early in Asia on Thursday, having jumped to a near one-month high on the dollar as Europe took a step closer to shoring up its financial rescue fund.

Lawmakers in Slovakia struck a deal on Wednesday to ratify a plan to bolster the euro zone's rescue fund by Friday, effectively ending a crisis that had threatened the currency's main safety net. Slovakia is the only country in the 17-nation bloc left to approve the revamp of the fund.

Adding to the sense of urgency, the President of the European Commission, Jose Manuel Barroso, said Europe needed to take decisive action on Greece and outlined a broad plan to contain the debt crisis.

As European officials step up efforts to provide a more specific roadmap to resolve its debt woes and recover investor confidence, the European Union is expected to announce a bank recapitalization plan designed to cushion the impact any default by Greece could have on the region's banks.

Germany and France, the leading powers in the bloc, have promised to propose a comprehensive strategy to fight the debt crisis at an EU summit on Oct. 23.

In credit markets, which had been feeling the strain of waning confidence in the financial system in recent months, the iTraxx Asia ex-Japan investment grade index narrowed by about 15 points.

Oil prices fell on Thursday, with Brent crude futures down 0.1 percent at $111.21 a barrel after rising the day before for an 11.6 percent gain over six sessions. U.S. crude futures fell 0.85 percent to $84.84 a barrel, after snapping a five-session streak of higher closes on Wednesday.

Asian markets are focused on China's trade data due at around 0100 GMT to gauge the strength of the world's second-largest economy.

A stronger-than-expected reading would boost investor confidence about a soft landing for the Chinese economy, while a weaker outcome would add to worries about global growth. – Reuters