- Asian equity markets are in rally mode as European Union, IMF, and the ECB join forces not only to bail out Greece but contain the sovereign crisis contagion from spreading further across Europe. With just about 90 minutes left in Tokyo trading, Nikkei225 and the Kospi are up about 1.5%, S&P/ASX is up 1.9%, while the Taiex is up 0.9%. Shanghai Composite remains the conspicuous underperformer, falling 0.6%, as concerns over govt steps to restrain the property market bubble and worries about slower growth later in the year weigh on investment sentiment. Ahead of the Monday session, S&P and Dow Jones futures are also suggesting extreme optimism, with 2.8% and 2.3% front-month rallies in respective contracts.

SPEAKERS/PRESS

- Europe: Eurozone finance ministers have agreed on a €500B mechanism to contain Greek fiscal crisis through a "special purpose vehicle", comprised of €440B in guaranteed loans from EU states and €60B in funds from EU budget. In addition, the IMF stands ready to provide up to €220B in loans under the auspices of tighter fiscal conditions. Earlier, the IMF also approved €30B 3-yr loan for Greece, with €5.5B disbursed by Wednesday to top out a total of €20B to become immediately available for Greece. IMF also forecasted Greece GDP to fall 4% in 2010 before rising 1.1% by 2012, noting the demand in Greece is still strong, and output may not contract as much as anticipated. IMF Chief Strauss Kahn said Greece is facing a difficult path, but the govt's austerity plan is "credible" and "well-balanced", with implementation becoming key. Separately, IMF's Lipsky suggested the austrerity plan is somewhere between "accepted and supported" by Greek people. Note the latest survey taken by Greek press showed about 55% support the govt's austrerity plans in order to secure the €110B EU/IMF package vs 33% who oppose the plan. More importantly, about 80% believe that austerity measures will remain regardless of the demonstrations.

- Other EU states in peril move head off crisis: Spain's Fin Min Salgado announced plans to outline further spending cuts, helping the country lower 2010 budget deficit target to 9.3% of GDP from 9.8% prior target and 2011 budget deficit target to 6.5% from 7.5% prior target. Likewise, Portugal PM Socrates said certain investment projects would be delayed, reducing budget deficit target in 2010 from 8.3% of GDP to 7.3%.

- Central Banks: ECB announced unprecedented quantitative easing steps, with intent to buy govt and private debt both in secondary market and directly from Eurozone states. ECB said the scope of operations would be determined by governing council, with liquidity measures to be taken with full allotment over the next 2 months. Separately, US Federal Reserve reopened swap lines with other central banks, namely the BOJ, BOC, ECB, BOE and SNB. In an emergency meeting, BOJ confirmed reopening unlimited USD swap line until the end of Jan, 2011. Bank of Japan meeting minutes for early April revealed some members suggest economic recovery is proceeding faster than prior estimates amid signs of self-sustaining recovery. Some also noted employment conditions are improving, with global economic growth ahead of initial forecasts.

- China: PBOC Development Research Center Dep Director Ba Shusong warned economic growth in the country may slow in Q2/3 as fiscal stimulus recedes, suggesting PBOC should not raise rates. Former Chinese Lawmaker Cheng Siwei had a similar conclusion under the premise that tighter policy would only encourage further inflow of hot money into economy, fuelling speculative bubble.

- Australia/New Zealand: Australian Financial Review citing SQR Research pointing to Sydney's auction clearance rate falling from 69.4% to 66.3% over the last week, while that of Melbourne from 74.9% to 67.2%, with decline attributed to higher interest rates. New Zealand property appraisers also suggested housing activity remains pressured by uncertainty over the govt's budget, while Kiwi manufacturing industry spokesman has requested that the RBNZ holds off on raising interest rates amid heightened volatility in global financial markets.

- Geopolitical: German Chancellor Merkel's CDU/FDP coalition is projected to lose state elections at the most populous North Rhine-Westphalia (NRW) state. The loss is particularly meaningful given that Merkel is losing her majority of Parliament's upper house, which would require compromise with other states in passing of further federal reforms. In Australia, Nielsen poll showed the approval rating for Australia's PM Rudd has fallen 14 points to 45% - the lowest level since Rudd took office in 2007. Press report attributed popularity slide to proposal of 40% mining tax, delayed carbon trading scheme, abandoned plan to expand childcare, and raised tobacco taxes. In Japan, PM Hatoyama's approval rating also fell 9pts to 24%, just as Japan/US may have finally reached the politically contentious agreement to relocate a US military base on Okinawa.

EQUITIES

- Japan: Local press reported Toyota may post FY09/10 op profit ¥100B, helped by cost-cutting and govt stimulus. Note, 2 weeks ago, the company denied a separate press report it may post FY09/10 op profit of ¥50B. Also in auto sector, Nissan started construction of second plant in Guangdong, China. In other press reports, Sapporo and Suntory said to have increased production of premium beer beverages, while Toray rose sharply after securing a 15-yr deal with Airbus on supply of carbon materials estimated around ¥200-300B.

- In news related to BP, over the weekend the company reported a malfunction with respect to its efforts to clean up the oil spill in the Gulf of Mexico. BP disclosed that a structure that was being used to capture the leaking oil failed due to the presence of ice crystals near the seafloor and thus caused BP to delay its search efforts. In M&A news, US coal producer Peabody Energy said It would lower its bid for Australia's MacArthur Coal to A$15/share from A$16/share, following prior reports that the transaction price could be revised due to the plan by Australia to levy a 40% tax on the profits of miners. BHP CEO Kloppers said the new super-profit mining tax could result in suspension of several resource projects planned by the company, namely shelving of the A$20B Olympic Dam expansion.

CURRENCIES/FIXED INCOME/COMMODITIES

- The euro was a strong gainer from the start of Asian trading on Monday, gapping up above 1.29 from 1.2750 Friday close. Single currency retested that level after initial correction, then sold off to 1.2800 on announcement of ECB QE, before reclaiming 1.29 level late in the day. Other risk-related commodity currencies were also sharply higher against the dollar - AUD/USD rose about 140 pips to 0.9040 session high, NZD/USD rose 80 pips to 0.7240, while USD/CAD fell from 1.0410 to 1.0270. Sterling gains were more muted as uncertainty after elections continued to present a hurdle at 1.49. Japanese Yen is weaker on broad risk appetite, as USD/JPY rose about 120 pips from Friday close to 92.80.

- Most commodity prices are sharply higher as risk appetite improved following the earlier emergency measures announced by the EU and ECB. Crude oil prices are higher by more than 2.5% and trading above $77/bbl, as of the time of writing. Spot Gold is lower by over 0.40% and trading near $1,200/oz, as the metal has been weighed down by the losses n XAU/EUR. In other commodities, copper prices are gaining by more than 1%, tracking the gains in the Euro. In commodities related news, China's April imports rose by 49.7% y/y, which was below analysts' estimates of 51.5% and slower than the 66% growth rate seen in March, as China's imports of iron ore declined on a m/m basis to 57M tons from 59M tons

ECONOMIC DATA
- (AU) AUSTRALIA APR ANZ JOB ADVERTISEMENTS M/M: -1.2% V 1.8% PRIOR (lowest level and first decline since Jan)
- (AU) AUSTRALIA APR NAB BUSINESS CONDTIONS: 8 V 13 PRIOR; CONFIDENCE:13 V 16 PRIOR (4-month low)
- (KS) SOUTH KOREA APR PPI: 3.2% V 2.6% PRIOR (13-month high)
- (CH) CHINA APR TRADE BALANCE: +$1.68B V -$0.6BE; EXPORTS Y/Y: 30.5% V 28.9%E; IMPORTS Y/Y: 49.7% V 51.5%E
- (ID) Indonesia Q1 GDP Constant Price q/q: 1.9% v 2.0%e, y/y: 5.8% v 5.8%