Asian shares edged up on Friday and the euro held firm as nervous investors took comfort from plans for coordinated action by major central banks to stabilize markets if Sunday's election in Greece results in turmoil.
Global markets have been volatile this week amid uncertainty about the outcome of the poll, which could set Greece on a path out of the euro zone and increase the likelihood of financial contagion engulfing other weak economies in the bloc.
"The market looks slightly stronger but that doesn't mean anyone is feeling any more confident about what's coming up," said Fujio Ando, senior managing director of Chibagin Asset Management in Tokyo.
"If you're buying now you want to cut your exposure to Europe. Look at orders for industrial machinery crashing in Europe - the region is affecting everywhere else, just like in 2008."
MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> rose 0.6 percent, while Japan's Nikkei share average (NIK:^9452) gained 0.3 percent. (.T)
Officials from the G20 nations, whose leaders are meeting in Mexico next week, told Reuters on Thursday that central banks were ready to take steps to stabilize financial markets - if needed - by providing liquidity and prevent any credit squeeze after Sunday's election.
The news boosted U.S. stocks (.SPX), which closed up around 1 percent on Thursday, while the euro extended earlier gains.
Disappointing U.S. state joblessness data however, which showed new benefit claims rising for the fifth time in six weeks, dragged on the dollar, which eased by 0.2 percent against a basket of major currencies (.DXY) on Friday.
DEBT CRISIS
The two-and-a-half-year-old European debt crisis has returned to the forefront of investors' concerns in recent months, wiping out the robust gains made by global equities <.MIWD00000PUS> in the first quarter of the year.
No Greek party has called for Athens to quit the euro, but the leftist SYRIZA party, which is running neck-and-neck with conservative New Democracy, rejects the stringent terms of the country's 130 billion euro international bailout, without which Greece will default.
If the election does not return a government committed to sticking with the bailout plan, investors fear a meltdown in the financial system that would force Greece out of the currency bloc and heap further pressure on struggling Spain and Italy.
Underlying the uncertainty, Moody's Investors Service said on Friday it had downgraded five Dutch banks, with ING Bank (ING.AS) kept on a negative outlook meaning it could be cut again, kicking off a long-awaited round of downgrades for major European institutions.
The downgrades did not hit Asian markets however, where the hopes being pinned on support from central banks helped the euro hold steady around $1.2630, having risen as far as $1.2635 in the previous session.
Hopes of further monetary stimulus were also boosted by Britain, which announced on Thursday it would flood its banking system with cash as the euro zone's crisis casts a "black cloud" over its economy.
That stimulus hope helped lift commodities, viewed as riskier assets because demand is closely tied to economic growth expectations, with copper rising around 1 percent to just below $7,500 a metric ton.
Oil also gained, with benchmark U.S. crude up 0.9 percent at around $84.65 a barrel, after OPEC agreed on Thursday to keep its collective output ceiling unchanged for the second half of the year at 30 million barrels per day.
Gold edged up to above $1,625 an ounce.
But deep unease over Europe, where Spain's 10-year bond yield hit a euro-era high above 7 percent on Thursday, kept demand high for safe-haven debt such as Japanese government bonds. The benchmark 10-year JGB yield slipped half a basis point to 0.855 percent.
"These yields aren't great, but they might get even worse after the Greek election," said a fixed income fund manager at a Japanese bank.
Source : finance.yahoo.com
