Shares, euro creep up from lows

Asian shares and the euro edged up from lows today, as opinion polls showing a lead for Greece's pro-bailout camp helped calm fears of a disorderly exit by Athens from the single currency that had driven a flight from riskier assets last week.

The recovery looked vulnerable, however, as MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6 per cent, still not far from its lowest level since late December which it touched on Friday.

The pan-Asia stock index posted a third consecutive week of losses last week for its longest losing streak in six months. It has now wiped out all its gains for the year, having been up some 15 per cent from end-2011 levels in late February.

Japan's Nikkei average edged up 0.2 per cent, after posting its longest weekly losing run in 20 years last week.

European shares looked set to track their Asian peers higher, with spreadbetters predicting major European markets would open up as much as 0.5 per cent. US stock futures were up 0.8 per cent.

"Today it really comes down to what is going on in Greece, the idea that Greece will stay within the euro zone calms the market," said Ben Taylor, a trader at CMC markets.

Investors fled to the safety of the US dollar last week on mounting concerns about Greece and instability in the Spanish banking sector, amid a lack of immediate policy responses from European leaders.

Copper gained 1 per cent to $7,717 a tonne while US crude rose 0.8 per cent to $91.62 a barrel and Brent added 0.6 per cent to $107.42. A firmer euro helped lift spot gold up 0.2 per cent at $1,576.69 an ounce.

While hopes remain that a compromise can be found that will keep Greece in the euro zone, talk of contingency plans have emerged for the possibility that Athens leaves the euro, posing severe contagion risks to the whole European currency bloc.

"Markets are highly conscious of the tail risk and talks of drawing up contingency plans in case of a crisis are done openly, suggesting a strengthening shift away from emerging countries or risk assets into the dollar," said Takao Hattori, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo.

"Having hit key lows for now, markets may see some respite from one-way selling, but sentiment remains highly vulnerable until the fate of Greece is clarified," he said.

Surveys published on Saturday showed Greece's conservatives have regained an opinion poll lead that would allow the formation of a government committed to keeping the country in the euro zone.

Uncertainty, however, will persist until Greece holds the crucial election on June 17th, keeping markets guarded. Several meetings of European leaders are also scheduled late in June.

Switzerland is drawing up plans for emergency measures including capital controls in case the euro collapses, although it does not expect to need them and will continue to defend a cap on the franc in the meantime, the head of the central bank said.

Agencies