SINGAPORE (Bloomberg) - Asian stocks rose, with the regional benchmark index rebounding from the biggest drop since February 2014, as investors weighed developments in Greece's debt crisis before an emergency meeting of European leaders.
The MSCI Asia Pacific Index gained 0.4 per cent to 144.06 as of 9:02 a.m. in Tokyo after falling 2 per cent on Monday.
The initial shock waves that hit markets after Greece's decision to call a referendum on austerity terms dissipated into a ripple by the end of Monday trading, as investors speculated the crisis wouldn't spread beyond the nation's borders. Greece is now under pressure to come up with a plan to stay in the euro after Greeks voted to reject further austerity in Sunday's vote.
"With a muted reaction to the Greece situation from Europe overnight, I would expect a bounce in defensives today after having seen two very solid days of selling," Evan Lucas, a markets strategist in Melbourne at IG Ltd., wrote in an e-mail to clients. "Clearly the market sees the risks from Greece as being ring-fenced and unlikely to create contagion."
Euro-area leaders and finance ministers gather Tuesday for an emergency meeting after German Chancellor Angela Merkel said "time is running out" for Greece to come up with a plan to stay in the currency union. The European Central Bank maintained the level of Emergency Liquidity Assistance available to Greece, while tightening terms related to collateral. Greek banks remain shut through Wednesday.
Greek Prime Minister Alexis Tsipras replaced Finance Minister Yanis Varoufakis, who resigned Monday after more than five months of fruitless back-and-forth in negotiating with creditors. Tsipras is betting that a less confrontational face will help him bring German Chancellor Angela Merkel and other European leaders back to the table.
Japan's Topix index climbed 1.2 per cent. South Korea's Kospi index gained 0.7 per cent. Australia's S&P/ASX 200 Index increased 0.3 per cent, as did New Zealand's NZX 50 Index. Markets in China and Hong Kong have yet to open.
FTSE China A50 futures rose 0.6 per cent in most recent trading, after most Chinese stocks fell on Monday as a fresh round of government support measures failed to spark gains outside the largest state-run companies. More than two shares dropped for each that rose on the Shanghai Composite Index, which closed 2.4 per cent higher. The ChiNext measure of smaller companies sank 4.3 per cent, while the Shenzhen Composite Index retreated 2.7 per cent.
China suspended initial public offerings and brokerages pledged to buy shares in weekend measures aimed at halting the market rout. Mainland shares posted their biggest three-week slump since 1992 on concern leveraged traders are liquidating bets after valuations exceeded levels seen during China's stock-market bubble of 2007.