Asian stock markets posted moderate gains Monday following reassuring news that most European banks passed much-anticipated "stress tests," suggesting the continent's banking system is strong enough to weather its massive debt crisis. European shares were down.
Oil prices hovered below $79 a barrel as Asian stock markets extended a rally from last week amid improving investor optimism. The dollar was lower against the yen; the euro rose.
The boost enjoyed by most indexes in Asia appeared to be wearing off as the day wore on. After digesting the results of the stress tests over the weekend, stocks markets in Europe were lower in early trading Monday. Britain's FTSE of 100 leading shares was off less than 0.1 percent to 5,312.62. Germany's DAX was lower by 0.3 percent to 6,143.55. France's CAC-40 was down 0.3 percent to 3,596.39.
U.S. stocks were set to fall amid a slew of earnings reports. Dow futures were down by 0.3 percent to 1,097.20 and the broader S&P 500 futures were lower by 0.3 percent to 1,097.20.
Japan's Nikkei index relinquished some gains at closing, but was still up 0.8 percent amid a report showing exports from the world's No. 2 economy rose for the seventh straight month in June. Other major indexes - including Hong Kong's Hang Seng and South Korea's Kospi - were also up.
Investors took heart initially from Friday's results out of Europe that only seven out of 91 banks flunked the stress tests. But the test results were widely anticipated, and some analysts even questioned whether they were stringent enough to yield an accurate picture of Europe's financial sector.
Castor Pang, director of research at Cinda International in Hong Kong said markets in Asia weren't overly impressed with the results.
"We don't see any big jump or drop in Asia's trading session," he said.
Steven Leung, director of institutional sales at UOB-Kay Hian Ltd., said China's policy on credit and earnings reports out of the U.S. this week would be the driving factors in this week's market performance. Some investors expect China to announce it is loosening credit curbs to pep up slowing economic growth.
"This week, we are watching for another round of earnings out of the U.S.," Leung said. "People are waiting for another round of signals."
On Friday, earnings reports and the Europe bank stress tests lifted stocks as the Dow Jones industrial average gained 102.32 points, or 1 percent, to 10,424.62. Verizon, Ford and American Express Co. reported figures that topped forecasts. A day before, stocks surged after Caterpillar Inc., UPS Inc. and other companies released positive results and forecasts.
Japan's benchmark Nikkei 225 stock average gained 72.70 points, or 0.8 percent, to 9,503.66, maintaining gains in the morning led by financial stocks. Companies with upbeat earnings projections for the April-June quarter also rose in the afternoon. Softbank Corp., which operates the only Japanese carrier to offer the iPhone, gained 0.9 percent, and Toyota Motor Corp. gained 0.2 percent. Mitsubishi UFJ Financial Group Inc., Japan's largest bank, rose 0.3 percent.
South Korea's Kospi added 0.6 percent to 1,769.07 amid news its economy expanded more than 7 percent from a year earlier in the second quarter. Australia's S&P/ASX 200 rose 0.6 percent to 4,486.10.
Elsewhere, Hong Kong's Hang Seng gained 0.1 percent to 20,839.91, and markets in Taiwan, New Zealand and Thailand also advanced. China's Shanghai Composite Index reversed course and finished up 0.7 percent to 2,588.68. Markets in Singapore, Bombay and Jakarta were down.
In currencies, the dollar was lower to 87.15 yen in Tokyo from 87.43 in New York late Friday. The euro was higher at $1.2910 from $1.2901.
Benchmark crude for September delivery was down 30 cents at $78.69 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 32 cents to settle at $78.98 on Friday.
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