November 4th, 2011
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Asia stock shows positive growth as Greece dropped referendum

asian-stocksBangkok: A day after the Greece Prime Minister, who was under intense European pressure, sought a political consensus and abandoned the referendum, the Asian stock markets rose sharply. Japan’s Nikkei 225 index rose 1.3 per cent to 8,750.76 and Hong Kong’s Hang Seng jumped 3.1 per cent to 19,840.45. South Korea’s Kospi gained 2.8 per cent to 1,921.94. The gains reversed four straight days of losses.

Prime Minister George Papandreou of the debt-stricken Greece shocked financial markets by unexpectedly announcing he would call a referendum on a European austerity plan aimed at restoring the country’s solvency. He decided to seek political consensus on a new bailout plan instead of holding a referendum after EU leaders raised the prospect of a Greek exit from the euro to preserve the single currency.

Greek Prime Minister George Papandreou bowed to cabinet rebels and agreed to step down and make way for a negotiated coalition government if his Socialists back him in a confidence vote on Friday, government sources told Reuters.

“He was told that he must leave calmly in order to save his (PASOK) party,” one source said on condition of anonymity. “He agreed to step down. It was very civilised, with no acrimony.” Papandreou, son and grandson of left-wing prime ministers, hinted he was ready to quit for the sake of national unity, telling parliament he was not wedded to his job.

Papandreou said his call this week for a referendum, which sparked panic on global financial markets and infuriated European partners, “was never a purpose in itself”, and he would be happy if the vote were not held.

Though there has been a positive change in the market remain jittery about how Europe will resolve its debt crisis. The risks to the region’s economy were also a clear factor in the ECB’s surprise decision yesterday, to cut interest rates by a quarter of a percentage point to 1.25 per cent.

Some analysts expect economic growth in Europe to slow in the final three months of the year or even go into reverse. The developments that occurred on Thursday helped send Wall Street to a second day of big gains. The Dow Jones industrial average gained 1.8 per cent to 12,044.47. The S&P 500 rose 1.9 per cent to 1,261.15 and the Nasdaq composite added 2.2 per cent to 2,697.97.

Reports on the U.S. economy also lifted stocks by lowering fears of a new recession. The number of people who applied for unemployment benefits last week dipped to the lowest level in five weeks. The number of applications fell below 400,000 for only the third time since April. Companies also made more orders to U.S. factories in September.

Benchmark crude for December delivery was down 9 cents to $93.98 in electronic trading on the New York Mercantile Exchange. The contract rose $1.56 to settle at $94.07 a barrel on Thursday, helped by the better U.S. and European news.









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