Asian Shares Ease, EU Starts Bank Reform Measures

Asian shares were seen easing down this Friday as the markets consolidated profits from a 3 day rally, while euro continues to remain underpinned after EU heads decided to make a big move for deeper integration and came up with a deal to form one single supervisor for banking. The Asia Pacific shares’ MSCI index outside Japan contracted 0.5%, after rising to 1% touching 7 months high last Thursday, which also was its maximum daily rise in 3 weeks. The index clearly looked all set for 1.4% of weekly gain, the maximum since the mid of September.

S. Korean shares were the one with maximum contraction of 0.9% as concerns surrounding corporate earnings cropped up again. Hong Kong managed to beat its friends with a 0.2% increase. Australian shares slid 0.1%, from the fifteen month high seen on Thursday, and its currency that serves like a gauge for any kind of risk appetite, continued to be steady at around $1.0370, after reaching the maximum high in three weeks of $1.0412 overnight.

Nikkei average of Japan lost 0.1%, after reaching 2% to a 3 week high last Thursday right after China announced 3^rd quarter economic improvement, which was predicted by the analysts. Naohiro Niimura, one of the partners at Market Risk Advisory said that investors all around are confirming the market lows and even though they continue to be cautious there certainly is an air of optimism amongst them.

EU leaders moved ahead towards making a single supervisor for banking for entire euro zone, and agreed to the fact that the supervisor would be in effect from next year. This, as per the leaders, would open the path for rescue fund of bloc to infuse capital straight away into the banks involved in ailing purposes. The EU officials and French officials said that all the 6,000 banks across the region that follow the same currency would slowly fall under the supervision of European Central Bank by 2014, starting the ones that are receiving aid from the state and then the large cross border institutions.

Creating this banking union is being considered as IMF and economists as an important step towards fighting the debt crisis, which has been there inEuropesince last two years.