World markets higher amid recovery hopes

[December 22, 2009]  LONDON (AP) -- World markets moved higher Tuesday ahead of a raft of U.S. economic figures expected to provide more evidence of continuing recovery.

In Europe, the FTSE 100 index of leading British shares was up 53.05 points, or 1 percent, at 5,347.04 while Germany's DAX rose 24.57 points, or 0.4 percent, to 5,955.10. The CAC-40 in France was 27.28 points, or 0.7 percent, higher at 3,899.34.

Wall Street was poised to open higher too after solid gains on Monday -- Dow futures were up 39 points, or 0.4 percent, at 10,381 while the broader Standard & Poor's 500 index rose 3.7 points, or 0.3 percent, to 1,111.90.

Investors will have a raft of U.S. economic news to digest later, including the final estimate of third quarter economic growth and November existing home sales figures.

The consensus in the markets is that the annualized increase in U.S. gross domestic product will be confirmed at 2.8 percent, and that existing home sales ticked up a further 3.3 percent to around 6.3 million units.

This week's gains have come as something of a surprise as many analysts were anticipating a modest pullback as investors shut up shop for the year by booking profits accumulated during the nine-month bull market.

However, confidence surrounding the global economic recovery has continued to grow. That has been most evident in a raft of corporate deals but also in Tuesday's announcement that the British economy did not contract as much as previously thought during the third quarter -- the country's statistics office said the British economy shrank by only 0.2 percent in during the July-September period, lower than its previous estimate of 0.3 percent.

"Keeping sentiment positive was the latest revision of the UK GDP figure for the third quarter," said David Jones, chief market strategist at IG Index.

"The way stock indices are moving at the moment -- although it is admittedly in low volumes -- we could yet see a move to fresh highs before 2009 is out," he added.

Earlier, Japan led Asia's advance as the yen continued to fall against the dollar -- a lower yen makes Japanese exports more competitive, all other things being equal. Nissan Motor Co., for example, ended over 6 percent higher.

The Nikkei 225 stock average jumped 194.56, or 1.9 percent, to close at a three-month high of 10,378.03.

By late morning London time, the dollar was up a further 0.2 percent on the day at 91.31 yen -- a marked advance from the 14-year low of 84.81 yen as recently as November.

Elsewhere, Hong Kong's Hang Seng climbed 143.94, or 0.7 percent, to 21,092.04 and South Korea's Kospi gained 0.7 percent to 1,655.54. Singapore's market was up 1.2 percent, Australia's index advanced 1.5 percent and Taiwan shares rose 0.9 percent.

But China's main market dived more than 2 percent amid fears the government will take steps to slow other sectors of the economy after vowing to control rising property prices. The Shanghai index slid 2.3 percent to 3,050.52 with losses led by real estate shares.

Elsewhere, the euro was 0.2 percent higher at $1.4306, having earlier fallen to a three and a half month low of $1.4267

The dollar has bounced back from 15-month lows against the euro in the last three weeks amid mounting expectations that the U.S. Federal Reserve will start withdrawing its extraordinary liquidity measures and raising interest rates sooner than expected. The euro has been dogged by concerns over the economic situation in a number of European countries.

Oil hung near $74 a barrel as the oil cartel OPEC kept production levels unchanged, as expected.

Benchmark crude for February delivery was up 4 cents to $73.76 in electronic trading on the New York Mercantile Exchange.

[Associated Press; By PAN PYLAS]

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