Asia stocks rise as Europe shockwaves fade

By PAMELA SAMPSON,AP Business Writer Updated at 2012-05-08 09:54:43 +0000


BANGKOK (AP) — Asian stock markets staged a modest recovery Tuesday as the initial shockwaves from election results in Europe faded. Trading is expected to remain volatile as Greece struggles to form a government after voters punished pro-austerity parties.

Japan's Nikkei 225 index edged up 0.6 percent to 9,172.09, a day after closing at its lowest level in three months. Hong Kong's Hang Seng rose 0.3 percent to 20,596.28.

South Korea's Kospi added 0.5 percent to 1,966.34 while benchmarks in Taiwan and Singapore also rose. As often happens, mainland Chinese stocks ran contrary to overseas trends and fell.

Markets were thrown into a tailspin Monday after weekend elections in France and Greece led to a sharp shift in the political landscape. In France, President Nicolas Sarkozy was thrown out of office by voters opposed to his belt-tightening program.

In Greece, voters punished the two parties that have overseen the country's harsh austerity measures and left no party with enough votes to form a government. Efforts to patch together a coalition so far have failed.

Investors initially worried that a changing of the guard among the leadership in Europe would jeopardize its plans for fighting a two-year debt crisis.

While Hollande has managed to reassure investors with his commitment to economic growth — stocks in Europe closed higher Monday — worries intensified about Greece's ability to stay solvent and remain in the 17-member euro currency bloc.

"Although the French election result has now been deemed to not be a threat, Greece remains a significant concern and is likely to be a source of volatility through the week," Stan Shamu of IG Markets in Melbourne said in an email.

The anti-austerity verdict from European voters will likely force leaders to come up with more acceptable solutions to the debt crisis. The deep cuts in government spending have already worsened the situation in many countries, leading them into deeper economic distress and increasing already high unemployment.

The Dow Jones industrial average closed down 0.2 percent at 13,008.53. The Standard & Poor's 500 index rose marginally to 1,369.58 and the Nasdaq composite average rose less than 0.1 percent to 2,957.76.

Benchmark oil for June delivery was down 16 cents to $97.78 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 55 cents to settle at $97.94 in New York on Monday.

In currencies, the euro fell to $1.3033 from $1.3050 late Monday in New York. The dollar rose to 79.98 yen from 79.94 yen.