Asia stocks rise amid hopes for central bank help

BANGKOK (AP) ? Asian stock markets were mostly higher Friday as investors waded back into riskier assets amid hopes that central banks in the U.S. and elsewhere were gearing up for action to help their beleaguered economies.

A U.S. employment indicator Thursday led investors to speculate that the U.S. Federal Reserve was preparing to pump more money into the economy to breathe life into its slackening recovery. The Labor Department said unemployment benefit applications rose 6,000 to 386,000 last week, a sign that hiring remains slow.

"A bigger-than-expected result for unemployment claims and a benign inflation reading saw investors speculate the Fed might conduct some easing to spur growth," Stan Shamu of IG Markets in Melbourne said in a market commentary.

Japan's Nikkei 225 index fell marginally to 8,563.46 after a higher opening. Hong Kong's Hang Seng added 1.3 percent to 19,049.09 and Australia's S&P/ASX 200 rose 0.5 percent to 4,061.

South Korea's Kospi fell 0.6 percent to 1,860.70 but benchmarks in Singapore, Taiwan and New Zealand rose.

Analysts have said they expect the Fed might renew its "Operation Twist" program under which it sells shorter-term securities and buys longer-term bonds to keep their rates down. The current program expires at the end of June.

The Fed has also done two rounds of bond purchases to try to lower long-term interest rates and encourage borrowing and spending.

Investors are on edge ahead of Greece's election on Sunday because parties opposed to the terms of the country's financial bailout could take control of the government. If that happens and the country leaves the euro, many fear the currency union could be torn apart and European banks could fail.

The other flash point is Spain, which faces a two-pronged crisis: financially feeble banks in need of cash injections from outside, and soaring borrowing rates due to investor reluctance to purchase its bonds.

Spanish Prime Minister Mariano Rajoy has asked EU leaders to push the European Central Bank to restart a program of Spanish bond purchases that helped ease the country's borrowing rate last fall.

But the ECB has been reluctant to intervene. The bank is forbidden by treaty from taking instructions from politicians and is opposed to flooding the economy with money to push down interest rates the way the Fed has.

Still, as Spanish banks and Greece's economy teeter toward insolvency, the ECB may have little choice, according to Francis Lun, managing director of Lyncean Holdings in Hong Kong.

"I think Europe will do something because they have to save Greece and Spain. If they don't, it will be the end of Europe," he said. "I think maybe the worst is over. I think we have reached the nadir. Finally they have been pushed to do something."

Among Hong Kong-listed stocks, China Railway Group rose 3 percent and China Railway Construction Corp. added 2.9 percent. Battered retailer Esprit, whose chairman and CEO resigned this week, gained 8 percent. The company is struggling to execute a turnaround amid weakness in Europe, its biggest market, and growing popularity of rival chains.

South Korean high-tech shares fell. Samsung Electronics tumbled 3 percent and SK Hynix fell 2.1 percent. LG Electronics was 1.3 percent down.

Meanwhile, stocks in the U.S. got a boost late Thursday after a Reuters report said major central banks were preparing for coordinated action if the results of Greek elections strain global financial markets.

The Dow Jones industrial average jumped 1.2 percent to close at 12,651.91. The Standard & Poor's 500 rose 1.2 percent to 1,329.10. The Nasdaq composite rose slightly to 2,836.33.

Benchmark oil for July delivery rose 72 cents to $84.65 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.29 cents to finish at $83.91 per barrel on the Nymex on Thursday.

In currencies, the euro rose to $1.2641 from $1.2600 late Thursday in New York. The dollar fell to 78.88 yen from 79.27 yen.

Associated Press

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