Announcement that eurozone will lend Spain up to €100bn is followed by jump in shares, commodities and euro currency
Shares, commodities and the euro have jumped in Asian trading after eurozone finance ministers agreed to lend Spain up to €100bn to shore up its struggling banks, to the relief of markets.
The euro rose nearly 1% to US $1.26694 on Monday, its highest level since May 23. The Australian dollar, closely linked to risk appetite, gained as much as 0.9% to $1.0005, its highest rate since 15 May.
Brent and US crude futures both rose more than $2 and London copper futures pushed more than 2% higher to $7,455 a tonne.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.8%. Its rise last week followed four weeks in a row of losses.
Japan’s Nikkei average added 2% after sagging 2.1% on Friday. Still, it eked out its first gain last week for nine weeks.
The strong Asian open was preceded by US stock index futures rallying more than 1% on Sunday, suggesting Wall Street will extend the previous week’s advance, which was the S&P’s best of 2012. US Treasury bond futures were down sharply in Asia on Monday, reflecting the switch out of so-called safe haven assets to riskier ones.
The 17-nation euro currency area has agreed to lend Madrid up to €100bn for its bank rescue fund, more than an initial audit suggested it might need.
The EU action would be a temporary success because the Spanish crisis was mostly centred around its banks, said Richard Hastings, macro and consumer strategist at Global Hunter Securities.
“The immediate effect on financial markets should be beneficial. Equity markets especially respond well to short-term improvements, while bond markets, especially higher-quality debt, might continue to send out signals in the form of very high prices and low yields that the trouble is not over.”
The rescue for Spain’s banks follows bailouts for Greece, Ireland and Portugal since 2010 and comes a week before a crucial election in Greece that could determine whether Athens will stay with the euro bloc and precipitate a deeper crisis over the euro.
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