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 1.7 percent at 2,859.97, while the DAX in Germany rose 2.3 percent to 5,315.88, with bank shares among the biggest gainers. The FTSE index of leading British shares was 0.7 percent higher at 5,099.61.

Wall Street was drawing comfort from the new plans, though less than the European bourses. The Dow industrial average rose 0.9 percent to 10,867.97 on the open, while the broader S&P 500 was up 0.6 percent to 1,143.73.

``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 $1.3454.

Oil recovered from early losses, tracking the equities markets, though gains were limited by concerns about the overall health of the global economy. Benchmark oil was up 13 cents to $79.98. Brent crude was down 8 cents to $103.89.

Before European stocks had started rising on hopes for a change of tone in the euro debt crisis, Asian markets had closed lower, spooked by worries about a global economic slowdown .

Japan's Nikkei 225 index slid 2.2 percent to 8,374.13 _ its lowest close since April 2009 _ due largely to the stubborn strength of the yen. The Japanese currency is used as a safe haven for international investors in times of trouble, and it has rallied strongly in recent months.

The dollar was down about 0.3 percent at 76.35 yen.

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.