Shares jump after referendum ditched

Asian stocks gained for the first time in five days and bond risk fell after Greece scrapped a referendum on a bailout plan, moving the nation closer to receiving aid.

The Nikkei 225 Stock Average climbed 1.7 per cent in Japan, Australia's ASX 200 Index rallied 2.62 per cent and South Korea's Kospi Index jumped 3 per cent.

In New Zealand the NZX-50 rose 0.6 per cent. Wall St's Dow Jones index closed 1.76 per cent higher yesterday.

Greek Prime Minister George Papandreou scrapped the referendum to avert a split in his party before a confidence vote, after European leaders said the move might determine the nation's membership in the currency union and would threaten aid payments.

With Greece's debt-ridden government at risk of collapsing all eyes are on the Group of 20 chiefs meeting in Cannes, France, as they push European authorities to flesh out and enact a week-old rescue plan that has already shown signs of unravelling.

"We are grappling with a lack of confidence in markets that leaders will act," Australian Prime Minister Julia Gillard said in the French seaside resort. "It is therefore very important for leaders to act."

Such calls - echoed by the US, Britain, China and Russia - highlight international disappointment that Europe missed the G-20's deadline of this week to deliver a fix for its fiscal woes. German Chancellor Angela Merkel and French President Nicolas Sarkozy sought to regain the initiative by keeping aid for Greece on ice and demanding Italy accelerate austerity.

"The euro zone must absolutely send a message of credibility to the whole world," Sarkozy said. "When we take decisions they must be applied, when we set rules they must be respected."

Papandreou yanked his planned referendum on his country's bailout after it split his party, roiled financial markets and drew unprecedented warnings from euro leaders that it may cost Greece its membership in the 17- nation currency club.

Whether Greece will need to quit the 12-year-old bloc - designed by its founders as permanent - was discussed by the G20, said Canadian Prime Minister Stephen Harper, who predicted "cooler heads will prevail".

Leaders monitored their BlackBerries through their talks to keep up with fast-moving events in Greece, according to UK officials.

As European Central Bank President Mario Draghi warns a recession is looming, the euro area may find some support after Russian President Dmitry Medvedev said the BRICS group of emerging markets is ready to stump up cash.

European policy makers are looking beyond their borders to more than double the spending strength of their €440 billion ($765 billion) rescue fund.

"We have to help preserve one of the world's leading currencies," Medvedev said. "We are all interested in preserving the euro."

Brazil, Russia, India, China and South Africa would contribute to Europe in line with their current voting rights at the International Monetary Fund, Medvedev said. In return, they expect Western powers to give them a bigger say at the Washington-based lender, he said.

The IMF may receive a broader fillip after the UK backed an increase in the fund's US$391 billion ($492 billion) war chest to give it a bigger crisis-fighting role.

"When the world is in crisis, it's right that you consider boosting the IMF," UK Prime Minister David Cameron said.

Indexes react

NZX-50... +0.61pc

ASX200... +2.62pc

Nikkei... +1.70pc

Dow Jones... +1.76pc

- Bloomberg