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Asian stocks rise on hopes that Europe will find a fix to regional debt crisis
BANGKOK (AP) ' Asian stock markets headed higher Wednesday, with investors emboldened by reports that Germany and France were moving closer toward resolving Europe's debt crisis.
Japan's Nikkei 225 index rose 0.6 percent to 8,789.83 and Hong Kong's Hang Seng was 1.7 percent higher at 18,387.88. South Korea's Kospi was marginally higher at 1,840.04. Benchmarks in Singapore, Australia and the Philippines were higher. Those in mainland China and Malaysia dropped.
The Guardian newspaper reported that France and Germany have agreed to expand a rescue fund. The paper cited unnamed European diplomats and said European officials are expected to take up the expansion along with a package of other measures at a meeting this weekend.
Wall Street rose sharply on the news. The Dow Jones industrial average rose 1.6 percent to close at 11,577.05. The S&P 500 index rose 2 percent to 1,225.38. The Nasdaq composite rose 1.6 percent to 2,657.43.
Gains in Asia were muted, however, since investors may want to see more consistent gains before wading deeply back into the market, analysts said.
"Following recent volatility, it is unlikely that we will see quite as big a rally locally as our U.S. peers today. Particularly at the retail end of the market, investors will probably wait to see successive gains before rushing back into the market," Stan Shamu of IG Markets in Melbourne said in a research note.
Concerns about a messy default by the Greek government have been the main cause behind many of the big swings on the world's stock markets lately.
The fear is that a default would cause deep losses for European banks that hold Greek bonds. That could lead to a freeze in lending between banks and escalate into another financial crisis similar to the one that occurred in 2008 after the collapse of Lehman Brothers.
Benchmark oil for November delivery was down 33 cents at $88.01 a barrel in electronic trading on the New York Mercantile Exchange.