Asian shares extend rally on Europe deal, US data

HONG KONG, Oct 28 (AFP): Asian markets extended their rally Friday from the previous day after European leaders finally came to an agreement on a plan to tackle the region's sovereign debt crisis. Adding to the relief was data from the United States showing the world's biggest economy grew at a strong pace in the three months to September, easing fears of a new recession there. Tokyo gained 1.39 per cent, or 123.93 points, to end at 9,050.47, Sydney was 0.12 per cent, or 5.1 points, higher at 4,353.3 and Seoul closed 0.39 per cent, or 7.44 points, up at 1,929.48. Hong Kong added 1.99 per cent in the afternoon and Shanghai jumped 1.44 per cent. Traders remained bullish after a deal was struck in the early hours of Thursday that will see 100 billion euros ($140 billion) of Greece's debts wiped out, banks reinforce their capital defences and a bailout fund get a huge boost. "In general, markets are happy that the decision-making process seemed to be finally working and willing to put back the lack of detail on the back burner for another day," said Stewart Hall, a senior currency strategist at RBC Capital Markets. After painstaking talks late Wednesday and early Thursday French President Nicolas Sarkozy eventually announced that Athens' bondholders had agreed to take a 50 per cent writedown on the money they were owed. Their agreement completed the final segment of a deal that will also see banks recapitalise in order to withstand the huge losses. The Brussels talks saw the European Financial Stability Facility (EFSF) bailout fund, which aims to protect other economies such as Italy and Spain, to be increased to more than one trillion euros from 440 billion euros. Athens will also receive another much-needed rescue package. European stock markets surged, with Frankfurt's DAX 30 up 5.35 per cent, the Paris CAC-40 jumping 6.28 per cent, and London's FTSE-100 up 2.89 per cent. Athens surged 4.82 per cent and Milan was 5.49 per cent higher. The news also gave a lift to the euro, which has been languishing over the past few months as Europe's leaders seemed unable to work out a concrete deal. The common currency hit an eight-week high above $1.42 in New York late Thursday before settling at $1.4187. In afternoon Tokyo trade it was sitting at $1.4171. The euro also rose to 107.49 yen in New York Thursday, well up from 105.98 late Wednesday before the deal was struck. In Tokyo, the euro bought 107.51 yen. However, the dollar remained under pressure from the yen, sitting at 75.88, just a little higher than its new post-war low of 75.66 struck in New York. Adding to the upbeat mood was Washington's first estimate of third-quarter growth, which was a better-than-expected 2.5 per cent, quelling worries that the economy was on the verge of a double-dip recession.