-- China, Australia urge rapid formation of a new Greek government
-- South Korea stresses short-term positive market impact
-- Some warn the relief rally in markets will be fleeting
SINGAPORE--Asia Pacific governments Monday welcomed Greece's pro-euro
New Democracy party's election victory, but pressed European leaders
to douse the region's sovereign debt crisis, which has unsettled
financial markets and threatened one of Asia's most important export
markets.
The Greek outcome reduced the risk of an imminent Greece exit from the
euro zone, a prospect that would deal a blow to the fragile European
economy just as the U.S. recovery is weakening and China's economy
slowing. Asian officials expressed hope that Greece will form a stable
government, reducing risks to the rest of the euro zone, where the
sovereign debt crisis has raged for some two years.
"In the coming days a new (Greek) government has to be formed. We hope
this new government will be on a solid footing," Chinese Vice Finance
Minister Zhu Guangyao said on the sidelines of the Group of 20 nations
summit in Los Cabos, Mexico.
Australian Prime Minister Julia Gillard stressed that risks to Asia
from the euro zone crisis haven't abated.
"Australia is not immune. Our direct exposure is modest but we are
exposed through our trading partners," she told Dow Jones Newswires in
an interview in Mexico. Only euro zone leaders can fix the region's
crisis, she said.
Across the Asia Pacific region, officials expressed a sense that while
the election outcome in Athens appears to avoid an immediate crisis,
it doesn't fix the fundamental problems that will continue to darken
the global economic outlook.
"The [outcome of] Greece's election is not a solution to the euro-zone
woe. It's just the beginning of addressing other problems in the
region," said Ryoo Sang-dai, a senior Bank of Korea official.
Officials in Indonesia and the Philippines said they are preparing
steps to support their economies in case Greece's newly-elected
leaders fail to form a stable government.
Greek voters Sunday gave the victory to the conservative New Democracy
party, which has begun talks with the third-place socialist Pasok
party toward forming a coalition government.
The New Democracy party favors working with euro zone partners to meet
the terms of Greece's austerity and bailout deal negotiated under the
previous government. The anti-bailout Syriza party finished in second
place and says it won't join a coalition government with New
Democracy.
The election results, seen as helping prospects for Greece to remain
in the single currency zone, gave riskier currencies and Asian stock
markets a boost. The euro rose to a three-week high of $1.2749, before
falling back to $1.2699 at 0345 GMT. Japan's Nikkei index was up 1.95%
at 0345 GMT.
Nevertheless, Asian traders viewed the Greek outcome cautiously,
noting that New Democracy faces many challenges in trying to form a
stable government, and some economists are warning that a coalition
government might be short-lived.
-- Aaron Back and Enda Curran in Los Cabos, Mexico and In-Soo Nam in
Seoul contributed to this article.
Write to Martin Vaughan at martin.vaughan@dowjones.com
(END) Dow Jones Newswires
June 17, 2012 22:05 ET (02:05 GMT)
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