Bernanke continues to give world stocks a lift

[August 24, 2009]  LONDON (AP) -- World stock markets rose Monday after optimistic comments from Federal Reserve chairman Ben Bernanke and further signs of an improvement in the U.S. housing market.

Tokyo shares led the way with a 3 percent advance, taking its cue from Europe and the U.S. on Friday after Bernanke said prospects for a near-term economy recovery in the U.S. and around the world appeared good. Also boosting confidence was a better-than-expected rise in U.S. home sales last month that helped relieve some of the fears about American consumers that have held stock markets down lately.

The FTSE 100 index of leading British shares was up 29.86 points, or 0.6 percent, to 4,880.75 while Germany's DAX rose 24.93 points, or 0.5 percent, to 5,487.67. The CAC-40 in France was 20.15 points, or 0.6 percent, higher at 3,635.96.

Mitul Kotecha, an analyst at Calyon Credit Agricole, said the cautiously upbeat tone from central bankers, including Bernanke, at last week's gathering in Jackson Hole, Wyoming, set up a positive backdrop for markets this week, given there were few indications monetary policy will be tightened any time soon.

"The global economy is rebounding led by emerging Asia and it is difficult to see a major reversal in risk appetite at least over the short term against this background," said Kotecha.

In Asia, Japan's Nikkei 225 stock average gained 342.85 points, or 3.4 percent, to 10,581.05, while China's main Shanghai index was up for a third straight day, gaining 1.1 percent to 2,993.43, after sharp falls last week triggered selling around the world. Hong Kong's Hang Seng added 1.7 percent to 20,535.94.

The gains in Europe were more muted though because of Friday's rally.

Wall Street was also poised to open modestly higher. Dow futures were up 32 points, or 0.3 percent, to 9,521 while the broader Standard & Poor's 500 futures rose 2.5 points, or 0.2 percent, to 1,027.70.

Investors will be focusing on U.S. economic data this week, most notably consumer confidence figures from the Conference Board on Tuesday. In particular, they will be looking to see if ongoing increases in unemployment more than offset hopes of an improvement in the wider economy.

Investors are fully aware that without the support of the U.S. consumer, which accounts for around 70 percent of the U.S. economy and 20 percent of the global economy, recovery will be muted at best.

"Markets will now be looking to tomorrow's U.S. consumer confidence figures for further signs of a recovery," said Arifa Sheikh-Usmani, an equities trader at Spreadex.

Elsewhere in Asia, South Korea's Kospi advanced 2 percent to it best finish in 13 months. Taiwan's index jumped 2.8 percent and Australia's benchmark was 3.2 percent higher. India's Sensex added 2.6 percent, and Thailand shares rose 1.7 percent.

Oil prices rose amid the brightening outlook for global demand. Crude for October delivery climbed 23 cents to $74.09 a barrel in Asian trade. The contract was up 98 cents on Friday.

The dollar rose 0.5 percent to 94.86 yen while the euro fell 0.3 percent to $1.4299.

[Associated Press; By PAN PYLAS]

AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.

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