European shares rallied and yields on euro zone government bonds tumbled on Tuesday after the new Greek government dropped calls for a write-down on its foreign debt.
The euro also nudged higher but was overshadowed in currency markets by the Australian dollar, which skidded after Australia unexpectedly cut interest rates.
In Athens, shares rose 9 per cent, with the Greek banking index up 17 per cent. Spanish and Italian stocks also outperformed as the pan-European FTSEurofirst 300 index gained more than 1 percent to just below a seven-year high.
Wall Street looked set to open higher, according to stock index futures.
The new Greek government, led by the left-wing Syriza party that won elections just over a week ago, on Monday ditched calls for a reduction of foreign debt and proposed ending a standoff with its official creditors by swapping the debt for new growth-linked bonds.
Finance minister Yanis Varoufakis said after meeting investors in London on Monday that the government would spare privately held bonds from losses.
Earlier, Asian shares sagged on growth concerns. MSCI's broadest index of Asia-Pacific shares, excluding Japan , dipped 0.2 per cent after weak US data added to concerns about the state of the global economy. Japan's Nikkei closed down 1.3 per cent.
In a brighter Europe, Greek bond yields fell sharply, with 10-year yields down nearly 115 basis points at 10.26 per cent and on track for their biggest daily fall since December 2012.
Yields on other lower-rated euro zone government bonds also fell but so did those on German bonds, the bloc’s benchmark. German 10-year yields dipped below those of Japan for the first time.
Investors said Greece's plans, unveiled on Monday as Mr Varoufakis toured European capitals in a diplomatic offensive to garner support as the government seeks to replace the country's EU/IMF bailout deal, appeared to offer the chance of compromise.
The Australian dollar was the big mover in currency markets, tumbling to a near six-year low against the US dollar after the Reserve Bank of Australia cut interest rates. The Aussie was last down 1.7 per cent at $0.7666.
The Norwegian crown hit a two-month high of 8.62 to the euro as oil prices rose.
Crude prices added to gains of more than 11 per cent in the previous two sessions, after BP announced a 13 per cent reduction in capital expenditure for 2015, adding to cuts in investment in the sector.
Oil prices had jumped in the past two days after data showed the number of US oil drilling rigs had fallen the most in a week in nearly 30 years.
Brent crude futures were last up 2.7 per cent at $56.21 a barrel.
Reuters
