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Asia stocks continue advance on Europe summit; Nikkei up 1.49%

Stock MarketsDec 11, 2011 10:52PM ET
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This article has already been saved in your Saved Items - Asian stock markets advanced Monday as investors snapped up equities on hopes European leaders will follow through on Friday pledges to align fiscal policies in a more centralized fashion and extinguish the debt crisis there.

During morning Asian trading, Hong Kong's Hang Seng Index was up 1.44%, Australia's S&P/ASX200 was up 1.00%, while Japan’s Nikkei 225 Index shot up 1.49%.

While the world applauded European pledges to integrate fiscal policies at a Friday summit, many investors still remained cautious as to whether the continent's leaders will act on their words, especially since Britain refused to sign the pact.

Britain said the new treaty called for items such as taxes on financial transactions, which it saw as bad for its financial markets.

Nevertheless, Asian stock markets viewed the treaty as a step in the right direction, and that cheery sentiment sent stock prices climbing.

Investors were further buoyed by a Reuters report that China created a new $300 billion vehicle to invest in Europe and the United States.

China, meanwhile, sad it would continue to take steps to steer its own economy back into growth mode.

The country recently lowered capital reserve requirements to spur more lending and lately, the country's leadership said it would maintain a "prudent" monetary policy and a "proactive" fiscal policy next year, Bloomberg reported, which the markets interpreted to mean more expansive economic policy is on the way out of Beijing.

"The word prudent will have a very elastic meaning in 2012," said Stephen Green, a Hong Kong-based economist with Standard Chartered Plc, according to Bloomberg.

While this "likely signals a cautious approach" to further easing in the short term, "the money tap will be loosened, no doubt."

In Japan, meanwhile, the country's Corporate Goods Price Index, which measures the change in the selling prices of goods purchased by Japanese corporations and serves as a good indication for inflationary expectations among manufacturers, came in at 1.7% in November, which beat a forecast of 1.5%, which the market took as bullish for stocks.

Household confidence figures for Japan were due out later Monday.

China's leading gainers included Ping An, up 3.01%, Cathay Pacific Air, up 2.98% and Bank of China, up 2.50%.

In Australia, top gainers included Intrepid Mines, up 9.22%, Mesoblast, up 6.54% and Flight Centre Ltd, up 5.21%.

European stock futures were mixed as markets sought to juggle sentiments stemming from pledges of more coherent fiscal policies in one hand and expectations with what the United States will do with interest rates in the other.

During Asian trade, France ’s CAC 40 futures were up 0.06%, while Germany ’s DAX 30 futures were down 0.24%. Meanwhile, in the U.K. FTSE 100  futures were off 0.43%.

Dow Jones Industrial Average futures were down 0.22%, while the broader S&P 500 futures were down 0.16%.

In the U.S., the Federal Reserve will hold its next monetary policy meeting on Tuesday.

The Federal Open Market Committee is expected to keep benchmark lending rates at their current 0.25% rate, although markets will move on language emerging from the meeting.

Talk of further easing and other loose monetary policies would be bullish for U.S. equities.

Asia stocks continue advance on Europe summit; Nikkei up 1.49%

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