Asia cheers Greece’s 11th-hour proposals to avert default

Asian shares got the week off to a strong start and US stock futures and the euro firmed on Monday, after Greece scrambled to avert defaulting on its debt with last-minute proposals aimed at appeasing its creditors.

Financial spreadbetters expected the mood to carry over into early European trading, with Britain’s FTSE 100 seen opening up as much as 0.2 per cent, Germany’s DAX 0.7 pe rcent and France’s CAC 40 0.4 per cent.

"European equities are set to get a pop higher on the open as traders cautiously welcome developments in Greece," Jonathan Sudaria, a dealer at Capital Spreads, said in a note.

Many investors were still cautious about prime minister Alexis Tsipras’ proposals because it was not immediately clear how far they yielded to creditors’ demands for additional spending cuts and tax hikes, nor whether creditors can stomach the offer.

The chief-of-staff to European Commission president Jean-Claude Juncker sent a tweet calling the latest proposal from Greece to resolve its debt crisis a "good basis for progress" in talks at an emergency euro zone summit meeting later on Monday.

"Today will supposedly be the last round of negotiations, so there could be a possible surprise in the form of an agreement with both parties seeing the writing on the wall," said Shinichiro Kadota, chief Japan forex strategist at Barclays in Tokyo.

“Still, it is unclear when and if an agreement will be reached, and the euro will remain sensitive to headlines over Greece.”

Nikkei adds 0.9 per cent

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.8 per cent after touching a more than two-week high, while Japan’s Nikkei stock index added 0.9 per cent.

US stock futures tacked on 0.4 per cent, while the euro also ticked up about 0.4 per cent to $1.1393, moving back toward a one-month high of $1.1440 hit on Thursday. The greenback was nearly flat on the day at 122.71 yen.

Athens is running out of cash to repay a €1.6 billion IMF loan due at the end of the month, unless it secures new financing from international creditors.

Speculation is rife that, if no deal is reached on Monday, Greece would need to impose capital controls on Tuesday to avert a banking crisis as savers keep withdrawing funds from banks.

Bank of Greece governor Yannis Stournaras met senior bankers on Friday and told them to brace for a "difficult day" on Tuesday if no deal is reached, two bankers at the meeting told Reuters.

In Asia, Chinese mainland markets were closed on Monday for a holiday, after posting their biggest weekly loss since 2008 last week.

Some strategists said such a correction was long overdue as Chinese shares had at one point marked gains of more than 40 per cent this year. But others fret that falling stock prices could stoke concerns about a slowdown in the Chinese economy.

In commodities trading, copper futures rose about 0.2 per cent $5,672 a tonne, moving away from last week’s three-month low hit on worries about demand in top metals consumer China and uncertainty in the Greek debt talks.

Crude oil futures edged slightly higher amid caution about Greece, and worries over high US oil product. Brent crude was up about 0.1 per cent at $63.07 a barrel, while US crude futures also rose about 0.1 per cent to $59.66.

Reuters