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World stocks regain ground after Greek vote shock
World stock markets regain ground lost after Greek proposal for bailout referendum
By The Associated Press

BANGKOK (AP) ' World stock markets began to claw back some lost ground Wednesday, following a wave of selling sparked by fears that Greece might reject an austerity plan and default on its massive debts.

Oil bounced to near $93 a barrel, while the dollar fell against the euro and the yen.

Stocks have struggled since Monday, when Greece's prime minister unexpectedly announced he would call a national vote on an unpopular European plan that entails painful tax increases and drastic welfare cuts for his debt-ridden nation.

But European shares shows signs of recuperation early in the day. Britain's FTSE 100 rose 1 percent to 5,473.96. Germany's DAX rose 1.6 percent to 5,928.31 and France's CAC-40 rose 1.7 percent to 3,121.68.

Wall Street also appeared headed for gains, with Dow Jones industrial futures gaining 0.7 percent to 11,761 and S&P 500 futures 0.9 percent higher at 1,235.10.

Several key Asian indexes also joined in on the rebound, with Hong Kong's Hang Seng shooting up 1.9 percent to 19,733.71 after a lower opening. Benchmarks in India, Singapore and Indonesia were also higher.

But Japan's Nikkei 225 index tumbled 2.2 percent to 8,640.42, its lowest close in three weeks. Benchmarks in Australia, Taiwan, Malaysia and the Philippines also posted losses.

Papandreou's unexpected call for a public vote on the aid package came just days before the leaders of the world's largest industrial and developing nations gather for the G20 economic summit in Cannes, France on Thursday and Friday. The troubled eurozone will be the summit's emergency topic.

A top European official warned that Athens could be left to go bankrupt if it went through with the vote and experts said the broader deal ' which hopes to protect larger countries such as Italy from markets panic ' could collapse.

Ultimately, Greece could leave the 17-nation euro currency union, causing financial havoc and pushing the global economy back into recession.

"A no vote could quickly start a chain reaction leading to Greece being forced to leave the Monetary Union. A resulting run on Greek banks could have serious spillover effects on Portugal and Ireland," Citibank analysts said in a report.

That prospect could be enough to keep the referendum from happening ' Papandreou's government could collapse before the proposal goes through, having lost huge amounts of support from its own party.

Mainland Chinese shares advanced, with the benchmark Shanghai Composite Index reversing early losses to gain 1.4 percent to 2,504.11 ' the Shanghai benchmark's highest close in over a month. The smaller Shenzhen Composite Index gained 1.8 percent to 1,060.17.

Comments by Premier Wen Jiabao that suggested China might ease its tight monetary policies were enough to overcome the gloom that prevailed in the morning, said Liu Kan, an analyst at Guoyuan Securities in Shanghai.

"That means more to the mainland Chinese markets than European debt crisis," Liu said.

Nearly 50 companies hit the daily limit of 10 percent. China National Software & Service Co. jumped 10 percent due to news of tax relief for software companies. China Life Insurance Co. gained 2.5 percent while China Merchants Bank added 1.9 percent.

Japan's powerhouse export sector fell sharply, a day after data showed that U.S. manufacturing grew more slowly in October, hampered by weak demand for exports. Toyota Motor Corp. tumbled 3.5 percent, Panasonic Corp. lost 3.8 percent and Sharp Corp. fell 4 percent.

Japanese utility Tokyo Electric Power Co. fell 1.3 percent after saying there may be signs of fresh nuclear fission in the No. 2 reactor at its disaster-damaged Fukushima Daiichi power plant.

Mazda Motor Corp. slid 5.4 percent after reporting it expects a loss of 19 billion yen ($244 million) for the fiscal year through March 2012, down from an earlier projection of a 1 billion yen ($12.8 million) profit.

Sony Corp. fell 3.6 percent after it reported a 27 billion yen ($346 million) loss for the latest quarter and downgraded its annual earnings forecast due to the strong yen and poor sales of flat panel TVs.

Hong Kong-listed shares of China Railway Construction Corp. soared 10.5 percent and China Railway Group Ltd. jumped 9 percent after news reports said the country's Ministry of Railways was in line for a new injection of funds.

The Dow fell 2.5 percent to close at 11,657.96 on Tuesday. It was the biggest drop since Sept. 22. The S&P 500 lost 2.8 percent to 1,218.28. The Nasdaq composite dropped 2.9 percent to 2,606.96.

Benchmark crude for December delivery was up 70 cents at $92.89 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1 to settle at $92.19 in New York on Tuesday.

In currency trading, the euro rose to $1.3791 from $1.3715 late Tuesday in New York. The dollar slipped to 78.08 yen from 78.33 yen.


AP researcher Fu Ting contributed from Shanghai.

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