World markets up on manufacturing recovery hopes

[August 03, 2009]  LONDON (AP) -- World stock markets mostly rose Monday after economic data around the world encouraged hopes that the end of the recession is in sight and that some of the world's biggest economies may actually start to grow again in the third quarter.

In Europe, the FTSE 100 index of leading British shares was up 76.62 points, or 1.7 percent, at 4,684.98 while Germany's DAX jumped 92.71 points, or 1.7 percent, to 5,424.85. The CAC-40 in France was 52.61 points, or 1.5 percent, higher at 3,478.88.

Earlier in Asia, Hong Kong's Hang Seng rose 223.93, or 1.1 percent, to 20,807.26 but Japan's Nikkei 225 stock average down 4.36 points, or less than 0.1 percent, to 10,352.47. Chinese shares hit a 14-month high Monday after two surveys showed the country's manufacturing is expanding. The benchmark Shanghai Composite Index rose 50.53 points, or 1.5 percent, to close at 3,462.59 -- the highest since May 19, 2008.

Surveys in Europe pointed to an improving trend too and investors are hopeful that U.S. figures later will further encourage the belief that the world's largest economy is set for growth too. Dow futures were up 98 points, or 1.1 percent, at 9,224 while the broader Standard & Poor's 500 futures rallied 11.3 points, or 1.2 percent, to 995.70.

"Economic data this morning are adding legs to the perception that the worst of the global downturn is over," said Jane Foley, research director at Forex.com.

In Britain, the closely watched purchasing managers' index from the Chartered Institute of Purchasing and Supply jumped to 50.8 in July from 47.4 in June, largely as a result of a sharp pickup in new orders.

That was the highest reading since March 2008 and indicates that the sector, which accounts for around 15 percent of the British economy, is growing again. Again any reading above 50 points to an expansion in activity.

And financial information services company Markit said its purchasing managers index for the 16 countries that use the euro was revised up to an eleven month high of 46.3 in July from the initial 46 estimate and was way up on June's 42.6. Again it was a rise in new orders that pushed the PMI higher.

Earlier, Hong Kong brokerage CLSA Asia-Pacific Markets said its purchasing managers index for China rose to a 12-month high of 52.8 on a 100-point scale where numbers above 50 indicate an expansion. The survey echoed a report Saturday by the state-sanctioned China Federation of Logistics & Purchasing that showed manufacturing expanding for a fifth month running.

Stock markets around the world enjoyed hefty gains over the last month or so as investors warmed to a string of positive earnings reports around the world that fueled hopes that the worst of the global recession was over and that companies were positioning themselves for an imminent upturn.

"The bulk of Q2 earnings are now through and 71 percent of U.S. companies came in with 'better-than-expected' earnings making for one of the best quarterly readings in the last ten years," said Neil Mackinnon, chief economist at ECU Group.

Earnings from British banks Barclays PLC and HSBC PLC helped their share prices rally. By late morning London time, Barclays shares were up over 6 percent while HSBC's were up just under 6 percent.

Barclays said its first-half net profit increased 10 percent on stronger earnings from its investment banking division while HSBC delivered better than expected earnings for the first half.

"Coincident with this economic data is good news from the banking sector which underpinned stock markets in the European session and gave the risk trade more traction," said Forex.com's Foley.

Elsewhere in Asia, South Korea's Kospi gained 0.5 percent, Australia's benchmark advanced 0.5 percent but Taiwan's market dropped 0.3 percent.

Oil prices jumped above $70 a barrel on investor expectations a recovering global economy will boost crude demand. Benchmark crude for September delivery was up $1.15 to $70.60 a barrel in electronic trading on the New York Mercantile Exchange. On Friday, the contract rose $2.51 to settle at $69.45.

In currencies, the dollar rose 0.2 percent to 94.91 yen while the euro was up 0.1 percent to $14.4287.

[Associated Press; By PAN PYLAS]

Associated Press Writer Tomoko A. Hosaka in Tokyo contributed to this report.

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