* MSCI Asia ex-Japan rises 0.5 pct, Nikkei up 0.3 pct
* Euro off four-month lows, yen off three-month highs vs
dollar
* Oil rebounds, steady euro supports gold
By Chikako Mogi
TOKYO, May 21 (Reuters) – Markets recovered some ground on
Monday after heavy losses last week, but investors remained wary
about the euro zone despite world leaders calling for Greece to
stay in the monetary union and for Europe to balance austerity
with growth.
G8 leaders meeting at the weekend vowed to take all
necessary steps to combat financial turmoil and revitalise a
global economy increasingly threatened by Europe’s debt crisis,
but they offered no specific prescription for debt-crippled
Greece which holds fresh elections next month.
MSCI’s broadest index of Asia-Pacific shares outside Japan
rose 0.5 percent, after sliding as much as 3
percent to its lowest level this year on Friday. It posted its
worst weekly performance in nearly eight months with a weekly
loss of around 6 percent.
World stocks also erased the year’s gains on Friday as
investors fled risky investments for safe-haven assets on
concerns about the euro zone’s deepening debt woes.
Japan’s Nikkei stock average gained 0.3 percent,
after shedding 3 percent on Friday to log a seventh straight
week of losses, its longest such losing streak since the third
quarter of 2011.
Australian shares rose 0.7 percent after slumping to
a six-month low last week.
Concerns about contagion from Greek political turmoil have
been magnified by deepening banking sector instability in Spain,
and investors are expected to stay risk-averse at least until
the June 17 Greek election makes clear whether the nation will
stay or leave the euro, traders and analysts said.
“The fate of Greece won’t become clear until the election,
and markets will be swung around by comments from European
leaders in the meantime, all of which makes it extremely
difficult for investors to take any positions,” said Hirokazu
Yuihama, a senior strategist at Daiwa Securities in Tokyo.
“Today’s move is merely a rebound from sharp losses on
Friday and it doesn’t have momentum to rise strongly. The G8
outcome lacked the punch to give much incentive for markets.”
The euro inched up 0.1 percent to $1.2791, moving
away from a four-month low of $1.2642 reached on Friday,
which was not far from its trough of 2012.
But reflecting investor nerves, the yen, widely perceived as
a safe haven, hovered near its three-month high against the
dollar of 79.001 yen hit on Friday. The yen stood at
79.19 on Monday.
With a steadying euro, spot gold inched 0.3 percent
higher to $1,596.59 an ounce, after rising more than 1 percent
on Friday.
The G8 suggested mounting global support for highly indebted
euro zone economies to be allowed to take less strict austerity
measures and put more priority on stimulating growth. Reports
also suggested Greece’s anti-austerity forces could soften their
stance to avoid a catastrophic outcome for the nation.
“The G8 making clear its push for growth and stressing that
balance is necessary is positive for the markets and give some
sense of relief after Friday’s nervous session,” said Yuji
Saito, foreign exchange director at Credit Agricole Bank in
Tokyo.
“But it does not offer a buying incentive for the euro,
which had already seen short positions covered on Friday.
Markets are shifting their focus to an upcoming European summit
on May 23 and comments about the Greece election,” he said.
The May 23 summit will focus attention on whether European
leaders can strike a new balance between growth and the fiscal
reforms deemed vital to fixing the euro zone’s debt crisis and
regaining market confidence in the single currency.
French President Francois Hollande said on Saturday he would
make proposals for eurobonds at the May 23 informal meeting.
Recent opinion polls show Greek voters are returning to the
establishment parties that negotiated its bailout, offering
potential salvation for European leaders.
Alexis Tsipras, the Greek leftist who polled strongly in the
inconclusive May 6 election, says he wants talks to keep Greece
in the euro. He is looking to forge ties with likeminded
European figures such as Hollande.
G8 leaders also raised the pressure on Iran on Saturday,
signalling their readiness to tap into emergency oil stockpiles
quickly this summer if tougher new sanctions on Tehran
threatened to strain supplies.
Oil prices recovered early on Monday, with U.S. crude
up 0.1 percent at $91.57 a barrel, after falling more than 1
percent on Friday. Brent crude, which closed at its
lowest in 2012 on Friday, also inched up 0.1 percent at $107.23
a barrel on Monday.
Credit Agricole’s Saito said news that Germany’s largest
industrial union, IG Metall, had agreed to a 4.3 percent pay
rise from employers could imply more difficulty for the European
Central Bank to aggressively ease monetary policy if the euro
zone’s largest economy was solid enough to raise wages.
IG Metall’s pay rise was the biggest rise in wages in two
decades, which would boost consumption in Europe’s biggest
economy, analysts said on Sunday.
