European, Asian stocks rise amid US stimulus hopes

[February 06, 2009]  LONDON (AP) -- European and Asian stock markets climbed Friday, with Hong Kong's benchmark up more than 3 percent, amid hopes massive U.S. stimulus measures will mitigate the worst global slowdown in decades. Investors were also waiting for key jobs data from the U.S. later in the day.

Investors were optimistic the U.S. stimulus plan, which swelled to $920 billion as of Thursday, would soon win approval from lawmakers. Debate in the Senate continued for the fourth day as some lawmakers pressed for cuts.

Adding to the upbeat mood were growing expectations governments would do more to help the world's struggling finance sector.

In the U.S, Treasury Secretary Timothy Geithner was to deliver a speech Monday outlining an overhaul the government's $700 billion financial rescue program. It's expected to include steps to extract the toxic assets from bank balance sheets.

A rally in bank stocks sent European markets higher. By noon in mainland Europe, Britain's FTSE 100 was up 0.8 percent at 4,260.92, Germany's DAX added 0.8 percent at 4,548.35, and France's CAC 40 rose 0.6 percent at 3,084.64.

In London, shares in Lloyds Banking Group, Barclays and Royal Bank of Scotland rose 7.0 percent, 6.2 percent and 6.9 percent. In Paris, BNP Paribas was up 4.5 percent.

U.S. futures pointed barely upward with Dow futures adding 6, or 0.1 percent, at 8,000, and Standard & Poors 500 futures 0.4, or 0.1 percent, higher at 840.90.

In Frankfurt, carmaker BMW's shares rose 4.8 percent after it said sales fell 5 percent in 2008 as the global economic crisis hit demand, but that it would post "clearly positive" earnings for the year.

Stock movement was limited ahead of the monthly U.S. non-farm payrolls data due later Friday, which will give an indication on the extent of the recession in the U.S. economy. The ADP research organization predicted Wednesday employment fell by 522,000 in January.

"We're struggling for direction," said James Hughes, a market analyst at CMC Markets in London. "What we're seeing from a lot of these European markets is pretty much a waiting for key figures. Non-farm payroll data is going to be key even though they are in the U.S. -- whenever they do come out they put a lot of volatility into the markets.

"Hopefully today will give us some much-needed direction so we can move into next week -- whichever direction that is," he added.

In Asia, speculation China's economy was in stronger shape than originally thought helped Hong Kong and mainland shares. Better-than-expected manufacturing and bank lending reports this week have boosted confidence in recent days that Beijing's efforts to safeguard the economy were beginning to show results.

However, the move higher belied the atrocious economic data and corporate results released in recent weeks. As has become common, investors seemed to shake off the torrent of bad news and pay more attention to government actions.

"People are hoping more will be done by the major governments and central banks," said Dariusz Kowalczyk, chief investment strategist for SJS Markets in Hong Kong. "Investors are looking for any optimistic event to hang onto right now."

Every Asian market wracked of gains. Japan's Nikkei 225 stock average rose 126.97 points, or 1.6 percent, to 8,076.62, while Hong Kong's Hang Seng rose 476.14 points, or 3.6 percent, to 13,655.04.

In South Korea, the Kospi was up 2.8 percent at 1,210.26. Shanghai's index rose 4 percent, Australia's benchmark was up 1.2 percent and Taiwan's main stock measure was 2.5 percent higher. Benchmarks in India and Singapore also rose.

In Japan, shares in Toyota Motor Corp. edged up 1.6 percent. After trading closed, the world's largest automaker reported a huge loss for the fiscal third quarter and said red ink for the year would swell to 350 billion yen ($3.9 billion).

Hours before its results were announced, the company was hit with a downgrade from Moody's Investors Service. The agency cited the tough global auto market as a serious threat to Toyota's profits.

Toyota and other export-dependent Asian firms have been pummeled by the demand slump in the U.S., where consumers have cut back their spending dramatically.

Overnight in New York, better-than-expected reports at mega retailers such as Wal-Mart helped lift Wall Street.

The Dow industrials rose 106.41, or 1.3 percent, to 8,063.07. Broader stock indicators also climbed. The Standard & Poor's 500 index rose 13.62, or 1.6 percent, to 845.85, and the Nasdaq composite index climbed 31.19, or 2.1 percent, to 1,546.24.

Oil prices were lower in European trading Friday, with light, sweet crude for March delivery off 97 cents at $40.20 a barrel on the New York Mercantile Exchange. Overnight, the contract rose 85 cents to settle at $41.17.

[Associated Press; By LOUISE WATT]

AP business writer Jeremiah Marquez in Hong Kong contributed to this report.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.