European stocks turned higher after a weak start Thursday even as the region's leaders struggled to prevent the unravelling of an agreement to bail Greece out of its financial mess.

The gains in European markets came despite another session of losses in Asia. Britain's FTSE 100 swung between gains and losses before edging up 0.3 per cent to 5,498.33. France's CAC-40 rose 0.8 per cent 3,134.64. Germany's DAX was 0.6 per cent higher to 6,002.53.

Wall Street appeared set to head higher, with Dow Jones industrial futures rising 0.2 per cent to 11,792. Broader S&P 500 futures added 0.2 per cent to 1,236.90. Oil prices hovered above $92 US per barrel, while the dollar slipped against the euro and the yen.


Market prices draw some close attention in Italy on Wednesday. ((Antonio Calanni/Associated Press))

Markets have been gripped by uncertainty since Greece's prime minister unexpectedly announced Monday that he would call a national vote on the European bailout plan that entails painful tax increases and drastic welfare cuts in exchange for massive aid to keep his debt-ridden nation solvent.

European leaders then drew a line in the sand, saying the referendum that is expected in early December will determine whether Greece stays in the 17-nation grouping that uses the euro common currency — and vowing Athens will not get new aid until the result is in.

Papandreou is scheduled to explain his stance when he meets with leaders of the Group of 20 nations at a summit in France on Thursday and Friday. By then, however, his plans for a referendum may have collapsed — along with this government —as opposition to both picked up steam Thursday.

But if a vote went ahead and Greek voters rejected the austerity plan, it could lead to a messy default on the country's debt that would likely cause massive losses for banks that hold Greek bonds, and possibly spark a wider financial crisis that could send Europe into recession.

"The whole thing has become a mess and will certainly keep risk assets shackled in the short term, on the premise that there is a real possibility that Greece may vote against the revised bailout and austerity and subsequently find themselves having to fund their massive deficit," Stan Shamu of IG Markets in Melbourne said in a report.

In Asia, Hong Kong's Hang Seng retreated 2.5 per cent to close at 19,242.50. South Korea's Kospi lost 1.5 per cent to 1,869.96 and Australia's S&P/ASX 200 shed 0.3 per cent to 4,171.80. Japanese markets were closed for a national holiday.

Mainland Chinese shares rose, with the benchmark Shanghai Composite Index gaining 0.2 per cent to 2,508.09. The Shenzhen Composite Index gained 0.4 per cent to 1,064.62.

Uncertainty hits energy stocks

The uncertainty about what lies ahead for the European Union — the world's largest economic grouping — as well as the subset of nations that use the euro common currency, hit energy stocks hard.

Hong Kong-listed PetroChina Co., the country's biggest oil and gas company, fell 3.8 per cent. State-owned coal miner China Shenhua Energy lost 3.3 per cent. Energy Resources of Australia was down 2.4 per cent.

South Korea's LG Electronics plummeted 13.7 per cent following news reports that the world's No. 3 mobile phone maker was seeking to issue new shares, Yonhap News Agency said.

Hong Kong-listed shares of Lenovo Group, a world leader in personal computer manufacturers, rose 3.2 per cent a day after reporting that its profit in the first half of the year nearly doubled on strong emerging market sales.

Among mainland Chinese shares, food-related companies gained on expectations of higher demand ahead of upcoming festivals, analysts said. VV Food & Beverage Co. Ltd. gained 2 per cent.

Shares of German automaker BMW AG rose 2.6 per cent after the company reported net profit rose nearly 24 per cent in the third quarter on stronger sales of newer models.

Luxembourg-based ArcelorMittal, the world's biggest steel maker, dropped 2.8 per cent after the company posted a 50 per cent drop in third-quarter net profit.

Separately, a research firm said Thursday that investors put $1.4 billion into Asian hedge funds in the third quarter of 2011, as they sought alternatives to equity and bond markets shaken by the debt crisis and weak growth in developed economies.

"With continued volatility associated with European sovereign debt and weakening global economic growth, Asian hedge funds represent a crucial area of growth potential for investors," Kenneth J. Heinz, president of HFR, a Chicago-based research company, said in an emailed statement.

In the U.S., Wall Street ended higher on Wednesday after an increase in hiring by private companies helped lift stock prices.