Euro, Asian Stocks Gain on Speculation Europe Will Help Greece

Feb. 9 (Bloomberg) -- The euro rallied and stocks in Asia reversed losses as speculation European officials will help Greece tackle its deficit eased concern that rising debt burdens will derail the global economic recovery. Oil and copper rose.

Europe’s currency gained 0.6 percent to $1.3726 at 6:48 p.m. in Tokyo, rebounding from near an eight-month low. The MSCI Asia Pacific Index of stocks climbed 0.3 percent after dropping as much as 0.6 percent. Oil gained 0.7 percent and copper rose 0.5 percent. The Dow Jones Stoxx 600 Index, a benchmark gauge for the euro region, added 0.3 percent and futures on the Standard & Poor’s 500 Index added 0.8 percent.

European Central Bank President Jean-Claude Trichet will leave a meeting of policy makers in Sydney a day early to attend a gathering of European Union leaders, fanning speculation that officials will come to Greece’s aid. More than $4.5 trillion has been wiped from stocks worldwide since Jan. 14 as lending curbs in China and Greece’s struggle to reduce its budget deficit prompted investors to flee risk.

“Some confidence is building up that Greece would avert the worst case scenario,” said Chu Moon Sung, a fund manager at Shinhan BNP Paribas Asset Management Co. in Seoul, which manages the equivalent to $26 billion in assets. “Investors seem to be looking for stocks that turned cheaper after they panicked on the Greece issue.”

Hong Kong’s Hang Seng Index rose 1.2 percent to 19,790.28 after dropping as much as 0.5 percent. Japan’s Nikkei 225 Stock Average pared a 0.9 percent drop to close 0.2 percent lower at 9,932.90. Australia’s S&P/ASX 200 Index declined 0.4 percent after losing as much as 1.3 percent.

EU Summit

Trichet will depart a symposium organized by the Reserve Bank of Australia today to attend the EU meeting, ECB spokeswoman Regina Schueller said. Greece’s debt woes had threatened to overshadow the Feb. 11 summit to lay the groundwork for a 10-year program to strengthen the EU’s competitiveness.

“A policy measure directed at Greece’s fiscal situation is potentially in the works,” said David Forrester, a currency economist at Barclays Capital in Singapore.

Greek two-year bond yields have surged to the highest in almost a decade and credit-default swaps on Spain and Portugal rose to a record yesterday as concern about Europe’s public finances spreads. So far, finance officials have stuck to their line that Greece won’t need outside help to reduce its deficit to the EU limit of 3 percent of gross domestic product, from 12.7 percent.

Technology Stocks

The euro rose to as high as $1.3740 from $1.3649 in New York yesterday. It touched $1.3586 on Feb. 5, the weakest since May. Japan’s currency declined to 89.56 per dollar from 89.26 in New York.

Australia’s dollar strengthened from near a four-month low versus the greenback after central bank Governor Glenn Stevens said holding down interest rates for too long may help create asset bubbles.

Asia’s technology stocks rose as the prospect of a rescue for Greece eased concern that exports will decline. Taiwan Semiconductor Manufacturing Co., which counts on Europe for about 12 percent of sales, climbed 2.1 percent. Murata Manufacturing Co., a Japanese maker of precision electronics that relies on Europe for 14 percent of revenue, added 2.3 percent, its first advance in eight days.

The MSCI Asia Pacific Index completed its third weekly decline last week as an unexpected increase in U.S. jobless claims and concerns over debt in Europe dented investor confidence. That cut the average price of stocks in the gauge to 18 times estimated earnings, the lowest level since February 2009, according to data compiled by Bloomberg.

Metals Gain

Macquarie Group Ltd., Australia’s largest investment bank, slumped 6.1 percent in Sydney after its second-half profit forecast disappointed some investors. Westpac Banking Corp. fell 1.6 percent as the cost of protecting Australian government bonds from default jumped to a nine-month high.

The Markit iTraxx Australia index of credit-default swaps on 25 Australian companies increased 8.25 basis points to 114.25 basis points as of in Sydney, according to Citigroup Inc. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan climbed 10 basis points to 134 basis points in Singapore, Citigroup prices show.

Copper for delivery in three months on the London Metal Exchange climbed as much as 1.2 percent to $6,527.50 a metric ton, extending yesterday’s 2.7 percent rise. Today’s gain for the metal used in autos and wiring reversed an earlier loss. Tin, nickel, lead, aluminum, nickel and zinc also advanced.

Crude oil rose above $72 a barrel in New York, reversing earlier losses. Oil rose as much as 0.8 percent to $72.45 a barrel, rebounding from a drop of 0.8 percent earlier in the day, as the dollar declined for the first time in five days.

To contact the reporters for this story: Linus Chua at lchua@bloomberg.net; Saeromi Shin in Seoul at sshin15@bloomberg.net