Asian stocks rise on Europe summit proposals

Asian stock markets rose sharply Friday after European leaders hammered out a strategy aimed at stanching an escalating financial crisis among the 17 countries that use the euro.

Leaders gathered in Brussels appeared to be making progress on the second and final day of a summit convened to map out a plan to turn around the continent's economy. Investors had expected the summit — like so many meetings before it — would not lead to a solution powerful enough to restore the confidence of markets.

Benchmarks in Japan, South Korea and Australia all reversed early falls to move higher. Japan's Nikkei 225 index rose 1.1 percent to 8,972.25. South Korea's Kospi gained 1.1 percent to 1,838.83 and Australia's S&P/ASX 200 index added 1.3 percent to 4,098. Hong Kong's Hang Seng jumped 1.9 percent to 19,387.14.

Analysts said the proposals from the summit represented credible steps in the region's efforts to contain a debt and financial crisis. European Union leaders agreed early Friday to use the continent's bailout fund to funnel money directly to struggling banks. They also agreed to the idea of a tighter fiscal union in the longer term.

"Although the EU summit is still stuck on major issues including joint debt, euro bonds ... the EU has laid out a long term plan in principle that can solve the problem if they can get all the leaders agreed on the details," said Jackson Wong, vice president at Tanrich Securities in Hong Kong.

"We don't expect a magical formula that can solve the problem right out from the EU summit. However, if we can see the stances from all the leaders, especially from Germany — that they are heading in the right direction — I think going forward, it should be OK."

Banking shares benefited from the news of help for their European counterparts. Japan's Nomura Holdings bolted 5 percent and Hong Kong-listed Agricultural Bank of China rose 2.4 percent. South Korea's Shinhan Financial Group Co. gained 3 percent.

Traders brushed off dour news from the U.S. The Commerce Department said the American economy expanded at a 1.9 percent annual rate in the first quarter, a weak pace that isn't expected to pick up.

Growth of around 1.9 percent typically generates roughly 90,000 jobs a month. That's considered too weak to lower the unemployment rate, which was 8.2 percent last month.

On the job front, applications for unemployment benefits stayed above a level last week that is generally considered too high to lower the jobless rate.

The Dow Jones industrial average closed down 0.2 percent at 12,602.26. The Standard & Poor's 500 index fell 0.2 percent to 1,329.04. The Nasdaq composite average fell 0.9 percent to 2,849.49.

Benchmark oil for August delivery was up $1.51 to $79.21 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.52 to close at $77.69 in New York on Thursday.

In currencies, the euro rose to $1.2583 from $1.2429 late Thursday in New York. The dollar fell to 79.29 yen from 79.45 yen.