Asian Markets Gain on Cyprus Bailout Deal

Most Asian markets gained in the morning, recovering from the lacklustre performance in the previous week, as eurozone finance ministers agreed to a deal on the €10bn (£8.5bn/$13bn) Cyprus bailout.

Japan's Nikkei average index traded 1.4 percent or 167.44 points to 12506.0 while South Korea's KOSPI was up 1.4 percent or 27.52 to 1976.2. Australia's S&P/ASX 200 added 0.5 percent or 27.20 points to 4994.5.

Hong Kong's Hang Seng Index gained 0.4 percent or 94.75 points to 22210.0. China's Shanghai Composite Index traded 0.3 percent or 6.42 points lower to 2321.9.

Finance ministers from the 17-member single currency bloc approved a deal between Cyprus and its international lenders on the much-needed bailout in the early hours of the day. The development came as a relief to the island nation's banking system which was on the brink of collapse without the aid funds.

The European Central Bank (ECB) had earlier set 25 March as the deadline for Cyprus to reach a deal, failing which it planned to cut the emergency liquidity provision to the country.

Under the agreement, investors with less than €100,000 as bank deposits will be exempted from the one-off tax levy. But reports suggest that large investors in Cyprus' second biggest and the worst hit lender, Laiki Bank, could see a major cut.

The single currency, which had come under pressure after eurozone concerns rebounded on a potential Cyprus exit, recovered as reports on the agreement boosted investor confidence.

"This morning, the single currency broke back above this level to start the Asian session at 1.303," said analysts at IG Markets in Singapore.

"It has the potential to rise as the dust settles around Cyprus".

However, the credit ratings agency Moody's has warned that despite a deal, Cyprus continues to remain under threat of a eurozone exit, given the financial conditions.

Major Movers

Financial firms in the region gained as the Cyprus bailout deal boosted sentiments. Nomura Holdings gained 2.5 percent in Tokyo while Ping An Insurance and AIA Group were up 0.7 and 1.5 percent in Hong Kong. Australia's Westpac Banking Corp added 1.3 percent. Woori Finance Holdings rose 5 percent in South Korea.

Resource stocks also gained in Hong Kong. CNOOC was up 3.6 percent while China Petroleum and Chemical Corp and China Shenhua Energy Company rose 3.1 and 2.8 percent respectively.