World markets rise ahead of Europe debt sales after overnight gains on Wall Street

Pamela Sampson, AP Business Writer, On Wednesday January 12, 2011, 3:51 am EST

BANGKOK (AP) — World stock markets climbed Wednesday, pushed higher by an overnight rise on Wall Street following a pledge by Japan to buy bonds aimed at financing Europe’s bailout fund.

Oil prices hovered above $91 a barrel after a report showed U.S. gasoline supplies rose more than expected, suggesting demand may have slowed. In currencies, the dollar weakened against the yen and the euro.

European markets opened higher, with Britain’s FTSE 100 up 0.3 percent to 6,030.05. Germany’s DAX was 1.2 percent higher at 7,024.67 and the CAC-40 in Paris was 0.8 percent higher at 3,893.44.

Wall Street was also set to advance, with Dow futures up by 0.5 percent, or 54 points, to 11,670. The broader Standard & Poor’s 500 futures rose 0.5 percent, or 6.2, to 1,276.60.

Japan’s Nikkei 225 stock average closed 2.12 points higher at 10,512.80. Banks were among the day’s best performers as they tracked gains posted by U.S. financial issues. Mitsubishi UFJ Financial Group Inc. surged 3.6 percent and rival Sumitomo Mitsui Financial Group Inc. jumped 2.7 percent.

Hong Kong’s Hang Seng index rose 1.5 percent to 24,125.61. Australia’s S&P/ASX 200 advanced 0.3 percent to 4,724.20.

South Korea’s benchmark Kospi closed at a record high for the second straight day, gaining 0.3 percent to 2,094.95. Samsung Electronics Co. rose 1.9 percent, Hynix Semiconductor Inc. gained 3.7 percent and shipbuilder Hyundai Heavy Industries Co. jumped 4.2 percent.

Kang Hyun-cheol, strategist at Woori Investment & Securities in Seoul, said that the long-term outlook for the Kospi is positive with most analysts expecting it to finish 2011 at 2,400 as interest rates remain relatively low amid strong domestic demand.

The benchmark, however, is likely to fall early this year amid a pessimistic earnings outlook for the fourth quarter of last year and first three months of this year, he said.

Chinese shares advanced, though demand was crimped by tight liquidity and jitters over possible further moves by regulators to tighten credit to combat inflation.

“The rebound today was a bit weak, because the market is still suffering from a lack of enough cash to sustain its rise,” said Liu Kan, an analyst at Guoyuan Securities, in Shanghai.

The benchmark Shanghai Composite Index gained 0.6 percent to 2,821.31, while the Shenzhen Composite Index of China’s smaller, second exchange rose 0.4 percent to 1,257.17.

Property shares were among the gainers, as investors reacted to news that proposed property taxes due to be introduced in some cities will only affect some transactions. Poly Real Estate gained 2.5 percent to 15.11 yuan.

Market tensions have eased after Japan, taking advantage of high interest rates and echoing a similar pledge by China, said Tuesday it would help finance European bailout efforts aimed at containing the continent’s financial crisis. Japan plans to buy a major portion of the European bonds being auctioned this month to finance emergency loans to Ireland.

Tey Tze Ming, a trader at Saxo Capital Markets, said that the direction of the market points to investor optimism, although he added: “I’m not sure why.”

“The fact that Japan is buying put some confidence in there, but I’m a bit skeptical about eurozone debt. That’s not going to disappear overnight.”

Japan’s pledge, which comes ahead of a series of crucial European debt sales this week, would help send bond yields down and ease debt pressures on countries like Ireland and Portugal. Portugal plans a bond auction of a little over euro1.2 billion ($1.55 billion) Wednesday, followed by bigger issues Thursday from Spain and Italy.

Traders also temporarily brushed aside concerns about unemployment in the U.S. Last Friday, the Labor Department announced that employers had added fewer jobs in December than analysts expected. Weekly jobless data will be released on Thursday, which might reduce market anxiety by adding “more clarity” to U.S. jobs numbers, Ming said.

But the bottom line, he said, is that “unemployment in the U.S. is exceedingly high. For a real recovery, you need unemployment to come down to 8 percent.” Anything else is “just market noise.”

The unemployment rate in the world’s No. 1 economy has now topped 9 percent for 20 months in a row, the longest such streak on record.

In New York Tuesday, profits from major retailers and an upgrade to Hewlett-Packard fueled stocks higher. The Dow Jones industrial average rose 34.43 points, or 0.3 percent, to close at 11,671.88.

The broader Standard & Poor’s 500 gained 4.73, or 0.4 percent, to 1,274.48. The Nasdaq rose 9, or 0.3 percent, to 2,716.83.

In currencies, the dollar slipped to 83.03 yen from 83.29 yen late Tuesday. The euro rose to $1.3011 from $1.2982.

Benchmark oil for February delivery rose 38 cents to $91.49 a barrel in electronic trading on the New York Mercantile Exchange.

AP business writer Kelly Olsen in Seoul and researcher Ji Chen in Shanghai contributed.

source: Yahoo finance

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