Asian markets, euro jump on EU deal

Asian markets and the euro surged on Friday after European Union leaders struck a surprise deal to allow the bloc's bailout fund to directly support struggling banks and pledged $US150 billion ($A149.87 billion) to boost growth.

The euro was up by almost 1.2 per cent after the agreement, which will allow emergency aid to crisis-hit Italy and Spain, was announced following marathon talks at an EU summit to save the ailing single currency.

Regional bourses, which had expected little from the summit, surged on the news, with Tokyo ending 1.5 per cent, or 132.67 points, higher at 9006.78, and Hong Kong closing 2.19 per cent, or 416.19 points, up at 19,441.46.

Seoul finished up by 1.91 per cent, or 34.83 points, at 1854.01, while Sydney ended up 1.23 per cent, or 49.8 points, at 4094.6. Shanghai closed 1.35 per cent, or 29.59 points, higher at 2225.43.

The accord struck in Brussels paves the way for the eurozone's 500 billion euros ($A623.32 billion) bailout fund to recapitalise ailing banks directly, without passing through national budgets and adding to struggling countries' debt mountains.

But this would occur only after a Europe-wide banking supervisory body is set up, with leaders aiming for that to happen at the end of the year.

It was also agreed the bailout funds would be used "in a flexible and efficient manner in order to stabilise markets", a reference to buying countries' bonds to drive down high borrowing costs that have crippled Spain and Italy.

EU president Herman Van Rompuy hailed the deal as a "real breakthrough" that would calm financial markets and reshape the eurozone to prevent a recurrence of the debt crisis.

Investors had low expectations from the summit, just one of many attempts to resolve the long-running euro debt crisis, and the deal took Asian markets by surprise.

But analysts warned against over-optimism.

"It is a bit of a relief, but it is not a game changer," Wee-Khoon Chong, Asia rates strategist at Societe Generale in Hong Kong, told Dow Jones Newswires. "The market is quite thin and it might have overreacted."

Markets had earlier edged higher after a decline on Wall Street.

The Dow Jones Industrial Average closed down by 0.20 per cent, or 24.75 points, at 12,602.26 on Thursday, after having been off by more than 170 points during the session.

The recovery from early losses in the last hour of New York trade came amid short covering and hopes that EU leaders would agree on measures to stem the crisis.

On currency markets in early European trade, the euro was at $US1.2583 from $US1.2449 in morning Tokyo trade, while it also rose against the Japanese currency to 99.92 yen from 98.60 earlier on Friday.

Oil surged on the eurozone deal. New York's main contract, light sweet crude for delivery in August, rose $US1.66 to $US79.35 a barrel and Brent North Sea crude for August delivery gained $US1.28 to $US92.64.

Gold was at $US1579.62 an ounce at 1110 GMT, compared with $US1569.79 an ounce late on Thursday.

In other markets:

- Taipei rose by 1.77 per cent, or 126.67 points, to 7296.28.

Smartphone maker HTC rose by 3.87 per cent to $Tw389.5 while Taiwan Semiconductor Manufacturing Co was 1.75 per cent higher at $Tw81.3.

- Wellington was down by 0.04 per cent, or 1.51 points, to finish at 3399.84.

Telecom Corp dropped by 0.42 per cent to $NZ2.39, Fletcher Building was off 1.01 per cent at $NZ5.87 and Chorus was up by 0.64 per cent to $NZ3.14.

- Manila slipped by 0.19 per cent, or 9.74 points, at 5246.41.

Philippine Long Distance Telephone Co slipped by 1.41 per cent to 2650 pesos, while Metropolitan Bank lost 1.50 per cent to 92.50 pesos.

- Singapore closed 1.11 per cent, or 31.63 points, higher at 2878.45 points.

Diversified conglomerate Keppel Corp was 0.69 per cent higher at $Sg10.28 and commodities trading firm Olam International eased 0.28 per cent to $Sg1.81.

- Kuala Lumpur was 0.31 per cent, or 4.91 points, higher at 1599.15.

Utility Tenaga Nasional gained 0.75 per cent to 6.74 ringgit, while plantation giant Sime Darby inched up by 0.10 per cent to 9.89. Budget carrier AirAsia lost 0.28 per cent to 3.57 ringgit.

- Jakarta rose by 1.75 per cent, or 68.00 points, to close at 3955.57.

Adaro rose by 6.6 per cent to 1450 rupiah, Bayan Resources gained 6.4 per cent to 700 rupiah, Bumi Resources added 2.8 per cent to 1110 rupiah and Bukit Asam rose by one per cent to 14,650 rupiah.

- Bangkok edged up 0.07 per cent, or 0.79 points, to 1172.11.

Energy company Banpu rose by 2.28 per cent to 448.00 baht and oil giant PTT was up by 0.94 per cent at 323.00 baht.

- Mumbai rose by 2.59 per cent, or 439.22 points, to 17,429.98.

• Find a personal loan
• Find a credit card
• Find a home loan
• Find a savings account