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Asia stocks advance but euro zone fears cap gains; Nikkei adds 0.1%

Stock MarketsMay 28, 2012 02:46AM ET
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This article has already been saved in your Saved Items - Asian stock markets edged higher on Monday, after opinion polls in Greece showed conservative parties hold the lead in next month’s national elections, while growing fears over Spain’s deteriorating financial situation capped gains.

During late Asian trade, Hong Kong's Hang Seng Index rose 0.35%, Australia’s ASX/200 Index climbed 0.95%, while Japan’s Nikkei 225 Index added 0.1%.

Market sentiment firmed up after an opinion poll in Greece indicated that the country’s pro-bailout parties were leading the polls ahead of elections, due to be held on June 17.

Global equities have been rattled in recent weeks as fears over the possibility of a Greek exit from the euro zone dominated market sentiment.

However, growing concerns over the fiscal health of Spain weighed after ratings agency Standard & Poor’s cut the ratings on five Spanish banks on Friday, and said it believes the country is entering a double-dip recession.

Adding to the gloomy environment, the president of Catalonia, Spain's wealthiest autonomous region, said on Friday it had few options to refinance over EUR13 billion in debt due this year.

Furthermore, a government source said on Sunday that Spain may recapitalize its fourth-largest bank, Bankia, which last week asked for EUR19 billion in funding.

In Tokyo, the Nikkei steadied after eight consecutive weeks of losses, with index heavyweights Fanuc and Fast Retailing supporting the benchmark.

Fanuc shares rose 2% after Morgan Stanley raised its price target on the industrial robot maker and said a recent correction in the stock was overdone.

Meanwhile, Fast Retailing shares climbed 2.15%.

On the downside, Renesas Electronics shares plunged 10.6% after weekend reports that the firm planned to cut up to 14,000 jobs and raise nearly JPY100 billion in capital. NEC, Renesas’s biggest shareholder, tumbled 9.25%.

The Nikkei is down more than 16% since hitting a one-year high on March 27, after rallying more than 19% in the first three months of the year, as China’s economic growth slowed and on renewed concern about Europe’s debt crisis.

Elsewhere, in Hong Kong, shares in property developers and financial sector stocks were mostly higher, supported by hopes for fresh monetary easing by China to prop up growth in the world’s second largest economy.

Bank of China shares added 2.1% and Sino Land shares rose 1.5%, but shares in Hang Lung Properties dropped 1%.

Meanwhile, shares in Australia outperformed the region, as investors returned to the market to pick up shares of battered resource sector stocks.

Gold miner Newcrest Mining rose 2.6%, while BHP Billiton and Rio Tinto added 1.65% and 1.85% respectively.

Looking ahead, the outlook for European stock markets was upbeat, after weekend opinion polls in Greece indicated that pro-bailout party New Democracy was leading the polls ahead of a general election next month.

The EURO STOXX 50 futures pointed to a gain of 1%, France’s CAC 40 futures rose 0.95%, London’s FTSE 100 futures advanced 0.75%, while Germany's DAX futures pointed to a gain of 1.05% at the open.

Trade looked likely to remain quiet on Monday, with some markets in Europe close for holidays, while U.S. markets were to remain closed for the Memorial Day holiday.

Asia stocks advance but euro zone fears cap gains; Nikkei adds 0.1%

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