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Asian stocks up sharply after European leaders pledge to help regional banks
BANGKOK (AP) ' Asian stock markets surged higher Tuesday following a pledge by European leaders to defend the region's banks against a continent-wide debt crisis.
Hong Kong's Hang Seng index shot up 4 percent to 18,376.55 in early trading. Japan's Nikkei was 2.2 percent higher at 8,796.69. South Korea's Kospi rose 2.2 percent to 1,805.72, and Australia's S&P ASX 200 index gained 0.8 percent to 4,232.50.
The gains in Asia followed a strong rally on Wall Street on Monday.
The Dow Jones industrial average soared 330 points, or 3 percent, its biggest one-day gain since Aug. 11. The Dow closed at 11,433.18 ' the highest since Sept. 16.
The Standard & Poor's 500 index rose 3.4 percent to 1,194.89, while the Nasdaq composite index rose 3.4 percent to 2,566.05.
German Chancellor Angela Merkel and French President Nicolas Sarkozy said Sunday that they would finalize a comprehensive response to the debt crisis by the end of the month, including a plan to make sure European banks have adequate capital.
Investors have been worried that European leaders aren't moving quickly enough to protect financial institutions in the event that Greece defaults on its massive debts.
A default by Greece could cause the value of Greek bonds held by European banks to plunge, hurting their balance sheets. U.S. banks would also be affected if Greece goes through a messy default, since they own Greek bonds and also have close ties to European banks.