Asian stock markets rose on Monday as investors cheered a new European fiscal pact aimed at fixing the region's debt crisis and preventing a collapse of the euro currency.
Japan's Nikkei 225 index jumped 1.5% to 8,665.76. South Korea's Kospi added 1.2% to 1,896.35 and Hong Kong's Hang Seng gained 1.6% to 18,874.22.
Under the deal reached on Friday, all 17 countries that use the euro agreed to allow a central European authority to oversee their future budgets. They also agreed to automatic penalties if they spend too much.
In addition to tighter controls on spending, Europe's new "fiscal compact" calls for the launch of a permanent bailout fund for euro nations in 2012, a year ahead of schedule. The deal also will send 200 billion euros ($267 billion) to the International Monetary Fund, which controls another emergency fund for countries in crisis.
But the deal won't help cut debt today, which in Italy, Greece and Spain has driven government borrowing costs close to levels considered unsustainable. That loose end brought into focus the future monetary policy of the European Central Bank, and whether it would be willing to buy enough national bonds from troubled countries to keep interest rates down.
Analysts at Credit Agricole CIB said "the lack of ECB action in terms of stepping up to the plate as lender of the last resort" still weighed on investment sentiment.
{{/usCountry}}Analysts at Credit Agricole CIB said "the lack of ECB action in terms of stepping up to the plate as lender of the last resort" still weighed on investment sentiment.
{{/usCountry}}There were also doubts about the willingness of each individual country to ratify the agreement.
Benchmark oil for January delivery was down 7 cents to $99.34 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.07 to finish at $99.41 per barrel on the Nymex on Friday.