* MSCI Asia ex-Japan soars 1.1 pct, buoyed by Cyprus deal
* Nikkei rises 1.7 pct, inching closer to 4-1/2-year peak
* Euro jumps away from last week's 4-month low vs dollar
* U.S. Treasury yields rise, oil and copper gain
* European shares set to advance sharply
By Chikako Mogi
TOKYO, March 25 The euro and Asian shares
rallied on Monday when Cyprus averted financial disaster by
sealing a tough last-ditch deal with international lenders for a
10 billion euro ($13 billion) bailout.
Cyprus agreed with the European Union, the European Central
Bank and the International Monetary Fund on Monday on a bailout
that will shut down its second-largest bank, Laiki Bank, and
inflict heavy losses on uninsured depositors, including wealthy
The plan was swiftly endorsed by euro zone finance
Deposits below 100,000 euros will be transferred to the Bank
of Cyprus to create a "good bank". Senior bondholders
in Laiki Bank will be wiped out while senior bondholders in the
Bank of Cyprus will also contribute to bank recapitalisation.
German Finance Minister Wolfgang Schaeuble said Cyprus's
parliament will not need to approve the bailout deal, seeking to
avoid a repeat of the unanimous "No" vote that shut down the
island's last debt deal.
Klaus Regling, the head of the euro zone bailout fund, the
European Stability Mechanism, said Cyprus will get the first
tranche of international aid in early May after all formalities
are finished in April.
"This will likely limit the euro's downside, with those who
shorted the euro covering their positions, and improve general
risk sentiment," said Hiroshi Maeba, head of FX trading Japan
for UBS in Tokyo. "But it's hard to see the euro testing $1.35
levels, given prospects euro zone interest rates will not rise."
European markets were seen climbing strongly, with financial
spreadbetters predicting London's FTSE 100, Paris's
CAC-40 and Frankfurt's DAX likely to open as
much as 1.1 percent higher. Benchmark indices in Spain
and Italy were seen to open 1 percent and 1.2 percent
U.S. stock futures were up 0.4 percent to point to a
solid Wall Street start.
The euro rose to a session high of $1.3050 from
around $1.2980 on the news, moving away from a four-month low of
$1.2844 hit on Tuesday. The euro climbed 0.9 percent against the
yen to 123.65 while the Australian dollar touched a
high of 99.25 against the yen, inching closer to a
4-1/2-year peak of 99.99 yen hit earlier this month.
Gains in the euro and currencies typically linked to risk
appetite capped assets favoured as safe-havens such as gold,
which rose 0.2 percent to $1,610.61 an ounce after
touching a one-week low earlier in the session. The benchmark
10-year U.S. Treasury yield added about 4 basis
points in Asia to 1.963 percent.
The MSCI's broadest index of Asia-Pacific shares outside
Japan soared 1.1 percent, bouncing off the
three-month low struck earlier last week.
Australian shares rose 0.5 percent on the Cyprus
news as well as on support from bargain hunters following last
week's fall and a recovery in iron ore prices.
South Korean shares outperformed their peers and
jumped 1.5 percent after closing the previous week at a 5-week
low, while Hong Kong shares advanced 0.8 percent.
"There's quite a bit of short-covering in today's rebound
after the Cyprus deal, but we have barely cut last week's
losses, so there's nothing to be too excited about," said
Jackson Wong, vice-president for equity sales at Tanrich
Japan's Nikkei stock average closed up 1.7 percent
to inch closer to a 4-1/2-year high.
The dollar rose 0.3 percent to 94.74 yen but against
a basket of key currencies, the U.S. currency was down 0.7
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U.S. crude futures rose 0.5 percent to $94.22 a
barrel and Brent rose 0.6 percent to $108.29.
"This is certainly very good for risk appetite overall and
that's going to have a positive impact across oil markets, so we
should see some positive sentiment reverberate through energy
markets overall for at least the next 24 to 48 hours," said Ben
le Brun, an analyst at OptionsXpress in Sydney.
London copper also added 0.4 percent to $7,687 a
tonne, recovering from 7-month lows marked last week when
investors shed risk in case of a Cyprus bailout failure. Price
recovery in copper primarily depended on the outlook for global
Some expressed caution over the latest deal with Cyprus.
"It's still very hard to see how that's going to stop the
contagion that people keep talking about," said IG Markets
strategist Evan Lucas, noting Monday's deal had set a precedent
for other European nations that might need a bailout.
"It means we've not seen the end of this kind of issue,"