Asian Stocks Rise as EU and ECB Announce Plans to Solve Credit Crisis

October 07 00:00 2011

NEW YORK, October 7 (RainbowNewsLine.com) – The announcement of coordinated recapitalization of European Banks by European Union and plans of liquidity surge by ECB (European Central Bank) pushed Asian stocks up with confidence.

Asian market showed confidence when European Central Bank announced plans for capital injection for banks to protect them from potential Greek default. South Korea’s Kospi Index gained 2.8%, Japan’s Nikkei 225 Index rose by 1.2%, Hong Kong’s Hang Seng Index was up by 2.4%, and Australia S&P/ASX 200 advanced by 2.4%.

On Thursday, ECB (European Central Bank) said that they intend to provide long term funding to needy European lenders by buying bonds. In addition to this, European commission’s President Manuel Barroso said that European officials plan to take strategic measures to cleanse Bank of all toxic assets and to restore confidence in the sector.

Many mixed reactions were observed from various entities. A strategist from RBS, Greg Gibbs said, “”There are still plenty of problems that face the European financial system,” and “The risk rally will probably run out to steam in the next week.”

A senior investment analyst at Colonial First State Global Asset Management in Sydney, Belinda Allan said that “It certainly sounds like policy makers in Europe are understanding the situation with the banking system and getting more willing to recapitalize the banks,”  and “That has been a positive step, but we haven’t seen that yet. I think it is a real risk until we see an announcement.”

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