Asian markets rose Monday while the euro held its own as European leaders struggled to hammer out a debt reform deal to keep Greece in the eurozone, with a source saying a compromise had finally been found.
Shanghai continued its recovery from weeks of wild volatility as several firms returned to trading while China released mixed data showing a pick-up in export growth but two-way trade sinking in the first half of the year.
Tokyo rose 1.57 percent, or 309.94 points, to 20,089.77 and Seoul jumped 1.49 percent, or 30.25 points, to 2,061.52. Taipei put on 1.34 percent, or 119.79 points, to 9,033.92.
In late trade Shanghai rallied more than three percent and Hong Kong added 0.26 percent.
However, Sydney gave back early gains to end 0.34 percent, or 18.8 points, down at 5,473.2 and Wellington shed 0.33 percent, or 18.64 points, to 5,706.70.
Germany and other eurozone leaders handed Greece a brutal ultimatum for desperately needed bailout cash Sunday, with Chancellor Angela Merkel pushing for a temporary euro exit — or "time out" — if it does not agree.
A European source told AFP that Greek Prime Minister Alexis Tsipras, German Chancellor Angela Merkel, French President Francois Hollande and EU president Donald Tusk hammered out the proposal on the sidelines of an emergency summit of the 19 eurozone countries.
"There is a four-way deal which will now be put to the 19," said the source, who spoke on condition of anonymity.
Tusk's spokesman Preben Aamann said on Twitter that the EU leader had reconvened the full summit after a break of several hours "with (a) compromise proposal", but gave no further details.
However, a Greek official said there were still issues to be resolved.
Athens had earlier said the proposals put forward by Merkel Sunday were "very bad", but with its lenders on the brink it looked to have little choice but to bow to reform demands.
In Japanese trade the euro dipped but managed to stave off heavy losses as the talks continued in Brussels.
It eased to $1.1142 from $1.1149 in New York late Friday. In earlier electronic trading, the single currency fell as low as $1.1089. It was also at 136.60 yen compared with 136.58 yen in US trade.
"Market reaction in the euro is surprisingly muted," said Steven Englander, global head of Group-of-10 currency strategy at Citigroup.
"The absence of agreement and toughness of terms are eye-catching, but investors are waiting for the outcome more than trying to anticipate it."
– Shanghai recovery –
Shanghai extended a rebound at the end of last week that came after weeks of extreme volatility, with investors settled by government moves last week to prevent a market crash.
While Greece's future in the eurozone hangs in the balance, attention is also on China.
China's stock market rose in the previous two sessions but dealers remain nervous after a month of massive selling that has seen the Shanghai Composite index fall about 30 percent, wiping trillions of dollars off valuations.
About 400 firms began trading again Monday in Shanghai after almost half the market was suspended last week to prevent a further meltdown.
Investors welcomed an upbeat trade report that showed exports increased more than expected in June.
"Imports improved significantly in June because of lower import duties," said Liu Xuezhi, an economist with Bank of Communications Co. in Shanghai, told Bloomberg News. "Exports are expected to maintain modest growth in coming months to help the economy."
However, Monday's figures also showed two-way trade sank almost seven percent in the first half of the year, well off the government's target of growth of "about 6.0 percent" for all of 2015.
Despite the uptick in Shanghai, Sam Tuck, a senior currency strategist in Auckland at ANZ Bank New Zealand Ltd., warned: "It's positive that the authorities didn't feel the need to do anything over the weekend but markets are still clearly nervous and we need to see most of the stock market open.
"There's still lots of halts."
The sell-off spread to other regional markets on fears for the world's number two economy and key driver of global growth.
On oil markets, US benchmark West Texas Intermediate for delivery in August fell 1.39 to $51.35 and Brent dropped $1.80 to $56.93.
Gold fetched $1,159.98 compared with $1,163.50 late Friday.
China growth slows to 6.9% in second quarter: AFP survey
Beijing (AFP) July 12, 2015 –
China's GDP growth likely slowed further in the second quarter, an AFP survey has found, as a slowdown in investment and trade weighed on the world's second-largest economy.
The median forecast in a poll of 14 economists indicates gross domestic product (GDP) expanded 6.9 percent in April-June, marginally down from 7.0 percent in the first three months of this year.
That would be the worst quarterly result since the first three months of 2009, in the depths of the global financial crisis, when China's economy expanded by 6.6 percent.
The National Bureau of Statistics (NBS) will release the official GDP figures for the first quarter of 2015 on Wednesday.
China's volatile stock markets have grabbed headlines this month after the benchmark Shanghai Composite Index fell more than 30 percent in less than four weeks, before reversing course in the last two trading days.
But economists are focused on more fundamental issues when assessing its overall health.
"According to the figures we have now, economic activities remained very sluggish, particularly fixed-asset investment, which grew 11.4 percent in May, a multi-year low," Liu Li-Gang, Hong Kong-based ANZ economist, told AFP of the second-quarter performance.
"Exports were weak and imports were even more so."
– 'Big downward pressure' –
Chinese authorities want investment to slow as part of their plan to diversify economic growth away from big-ticket projects to increasingly wealthy consumers. But too fast a deceleration can be harmful.
"The economy is still under quite big downward pressure," said Li Ruoyu, an analyst at the State Information Centre, a government think-tank in Beijing, also citing weak investment.
New restrictions on local government debt and finance vehicles have limited lower-level authorities' ability to fund infrastructure projects, she said.
"The implicit guarantees of the local governments are gone, hurting their borrowing abilities."
The stock market turmoil could also create new risks in China's financial system, which faces numerous other challenges such as high corporate debt and an opaque "shadow banking" sector.
But the swings in equities are largely seen as having little effect on the real economy — a key driver of global growth — and unlikely to prove a major detriment to private spending.
"Given that the stock market didn't provide any noticeable boost to spending on the way up, there is no reason to expect it to be a drag on the way down," Julian Evans-Pritchard, China economist at Capital Economics, wrote in a report.
"With only a small and relatively wealthy portion of Chinese households exposed to the stock market, we aren't particularly concerned about the impact of recent big falls in equity prices on consumption."
– Rate cuts –
For this year as a whole, the AFP survey predicts growth at a median 7.0 percent, more optimistic than a forecast of 6.8 percent in a similar poll in April and in line with the government's official target of "about 7.0 percent".
China last year recorded its slowest annual growth since 1990, expanding 7.4 percent, down from 7.7 percent in 2013.
The International Monetary Fund lowered its 2015 global economic growth forecast on Thursday, citing a quarterly contraction early this year in the United States, the world's biggest economy.
But the Washington-based institution left its forecasts for the eurozone and China intact, brushing off worries over the crisis in Greece and Shanghai share volatility.
"The puncture of what had clearly become a stock market bubble may have some limited effect on spending," the IMF's chief economist Olivier Blanchard said Thursday.
"There is no particular reason to have lost confidence" in China's economy, he added. The IMF sees China's GDP growing at 6.8 percent this year.
Economists see positive effects to come from authorities' efforts to put a floor on the slowdown.
The People's Bank of China, the central bank, has cut benchmark interest rates four times since November and also took steps to encourage banks to make more loans. Such measures can take time before growth reacts.
Sheng Laiyun, spokesman for the NBS, said in comments on its website that the economy had "shown signs of a recovery" as the stimulus kicks in.
He added that property investment, an area that has been a drag on growth, is expected to turn around on rebounding market demand.
China's new home prices increased in June for the second straight month, a private survey showed. In addition to rate cuts, authorities have taken steps to boost the property market, easing mortgage policies such as lowering minimum down payment levels on second homes nationwide.
