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Markets boosted by eurozone hopes

Asian stock markets rose amid hopes Europe will give its bailout fund more financial firepower but gains were tempered as South Korea reported its economic growth slowed to a two-year low.

Markets have been rattled over the past few days by fears that Spain, the fourth-largest economy among the 17 states that use the euro, could need a bailout along the lines of Greece, Ireland and Portugal.

Sentiment was given a boost by a suggestion from European Central Bank (ECB) policymaker Ewald Nowotny that the European stability mechanism, the eurozone's planned permanent bailout fund, could be given a banking licence.

That would give it the ability to borrow money from the ECB. Such a move would be of particular significance for Spain and Italy as the current bailout fund does not have enough money to rescue them both.

The advance in Asian markets was kept in check by more evidence of the toll that Europe's prolonged debt crisis is taking on the region.

South Korea, Asia's fourth-largest economy, said economic growth slowed to a two-year low in the second quarter as weakness in Europe crimped demand from South Korea's biggest market China.

Japan's Nikkei 225 stock average was up 0.3% at 8,389.38 and Hong Kong's Hang Seng added 0.2% to 18,907.42. South Korea's Kospi gained 0.5% to 1,778.18. Australia's benchmark inched up 0.4% to 4,138.70 and the Shanghai Composite rose 0.1% to 2,139.15.

Wall Street was mixed on Wednesday as investors weighed earnings reports that ranged from good to bad.

The Standard & Poor's 500 slipped 0.42 points, or 0.03%, to end 1,337.89. The Dow Jones Industrial Average rose 58.73 points, or 0.5%, to 12,676.05. That snapped a three-day, triple-digit losing streak for the index.

In energy trading, benchmark crude for September delivery was down 19 cents at 88.78 dollars a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 47 cents on Wednesday in New York to end at 88.97 dollars. The euro was little changed at 1.214 dollars. The dollar rose slightly to 78.10 yen.

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