Asian markets cheered by EU progress

Asian stock markets were mostly higher today after signs of progress in debt-plagued Europe – a successful bond sale in Italy and the naming of a new leader in Greece.

Hong Kong’s Hang Seng gained 0.4% to 19,035.94 and South Korea’s Kopsi added 1.2% to 1,835.34. Australia’s S&P/ASX 200 rose 0.2% at 4,251.70, and benchmarks in Singapore, Taiwan and New Zealand also rose.

After opening higher, Japan’s Nikkei 225 index slipped 0.1% to 8,492.36,

Investors were calmed after Greece – which is struggling to pull back from the brink of bankruptcy – named Lucas Papademos, a respected economist, as its new prime minister yesterday.

An additional sign of stability came after Italy was able to borrow billions at lower interest rates than analysts expected. On Wednesday, the rise in Italy’s 10-year bond yield to well over 7% stoked panic in financial markets that the country was heading toward a Greece-style debt crisis.

Traders are also fretting that debt troubles in Italy and Greece could blow up into a massive liquidity crisis and lead to a global financial meltdown.

In New York on Thursday, the Dow Jones industrial average rose 1% to close at 11,893.86. It plunged 389 points on Wednesday after Italy’s borrowing rates soared and talks in Greece to name a new prime minister broke down.

Positive economic data from the US also boosted hopes that the world’s number one economy would avoid a double dip recession.

The Labour Department reported on Thursday that the number of people applying for unemployment benefits in the US fell to 390,000 last week – the fewest since April. The data suggested layoffs are easing and that the economy grew slightly better over the summer than estimated.

The S&P 500 index gained 0.9% to 1,239.70, and the Nasdaq rose 0.1% to 2,625.15.