Hope for new approach in euro crisis buoys markets

PARIS (AP) -- Hopes that European leaders will consider new ways to fight the debt crisis, including a contained Greek default, reassured investors on Monday, though analysts said more specifics will have to emerge before a rally gains traction.

Over the weekend, European officials said Germany and other rich EU countries are pushing for a new strategy to the debt crisis, which is threatening to take down the eurozone's larger economies.

One proposal on the table is to ask banks and other private institutions that hold Greek bonds to take a far bigger loss on those holdings, slashing Athens' debt. Many observers have said Greece will not manage to pay down its debt even after taking into account the reduction agreed in July.

The new strategy could also see the firepower of the continent's (euro) 440 billion ($590 billion) bailout fund multiplied several times.

It's not clear if these proposals will gain support but the fact that they were being considered spurred stock markets in Europe after a week of disastrous losses.

By early afternoon, France's CAC-40 was up 2.2 percent at 2,871, while the DAX in Germany rose 2.3 percent to 5,318. The FTSE index of leading British shares was 0.9 percent higher at 5,113.02.

Wall Street was drawing comfort from the new plans, though less than the European bourses. Dow futures edged up 0.4 percent to 10,744, while the broader S&P futures were up 0.7 percent to 1,138.

``For now at least, it looks as if markets are giving some credence to a firm plan on how to tackle the debt crisis beginning to emerge,'' said Ben Critchley, a sales trader with IG Index. ``But if recent experience is anything to go by, this patience is unlikely to last too long if details are not forthcoming.''

In fact, the optimism was not extending to the euro, which has been battered by the continent's debt problems and fears that the currency itself could collapse. It was trading 0.5 percent lower at $1.3453.

Oil, too, was lower, indicating that concerns about the overall health of the global economy remain. Benchmark oil was down 67 cents to $79.18. Brent crude was down 13 cents to $103.84.

Asia followed that trend as well.

South Korea's Kospi fell 2.6 percent to end at 1,652.71 and Hong Kong's Hang Seng lost 1.5 percent to 17,407.80. Australia's S&P/ASX 200 receded 1 percent to 3,863.90.

Mainland China's benchmark Shanghai Composite Index dropped 1.6 percent to 2,393.18 _ its lowest close in 14 months. The smaller Shenzhen Composite Index lost 1.6 percent to 1,043.47. Shares in gold and insurance companies weakened.