World markets rise after Wall Street bounceback

[February 13, 2009]  LONDON (AP) -- World stock markets rose Friday, boosted by a late turnaround on Wall Street and renewed hopes about government economic stimulus plans as Group of Seven finance ministers gathered in Rome.

In late morning trading in Europe, Germany's DAX gained 1.7 percent to 4,480.23, Britain's FTSE 100 added 1.5 percent to 4,236.07, and France's CAC 40 surged 2.1 percent to 3,027.86.

Markets rebounded after swooning earlier this week on a lack of detail in the Obama administration's $2 trillion plan to revive the floundering U.S. banking sector. Investors seemed to take heart after Wall Street clawed back deep losses Thursday on reports the government may subsidize mortgage payments for troubled homeowners.

A surprise jump in U.S. retail sales for January also offered a glimmer of hope about the world's largest economy, though other data painted a less sanguine picture.

In Europe, stocks rose despite official data showing the euro zone economy contracted by a record 1.5 percent in the fourth quarter of 2008 from the previous quarter. German output fell 2.1 percent, the most since the country's reunification in 1990, while France saw a 1.2 percent drop.

"The latest euro zone GDP data confirm that the recession in the region is deepening at an alarming rate," said Jennifer McKeown at Capital Economics in London.

The data was largely as expected, however, and cemented expectations that the European Central Bank will cut rates again in March.

The focus in stock markets remained on the rescue of the global banking sector and energy prices.

Financial and mining stocks pushed higher, with oil and gas companies also advancing after the price of crude rose overnight. In morning trading in Europe, light, sweet crude for March delivery rose 66 cents to $34.64 a barrel on the New York Mercantile Exchange.

"It's mainly the oil price pushing things a little higher since it went higher overnight, but the U.S. mortgage plan is helping the banks especially," said James Hughes, market analyst at CMC Markets. "When you get something from one side there's always hope that it will come over the other side of the pond."

Deutsche Bank jumped 5.6 percent, BNP Paribas added 4.7 percent and Barclays rose 4.4 percent.

Steelmaker ThyssenKrupp AG's shares rose 4.6 percent after it said it expected to post a profit for the full year, albeit at a lower level than last year. It also said net profit slid 59 percent in the last three months of 2008 because of a steep drop in orders.

In Asia, China's markets extended gains of the past two months on hopes that Beijing's $586 billion economic stimulus package will engineer a quick recovery for the country's rapidly slowing economy. The Shanghai Composite Index was up 3.2 percent and has gained more than 20 percent since Nov. 28.

Chinese central bank figures released Thursday showed bank lending more than doubled in January to a record 1.62 trillion yuan ($237 billion) as lenders heeded government calls to loosen credit controls to help revive the economy.

"Liquidity drove stocks higher," said Mao Sheng, analyst for Huaxi Securities in the western city of Chengdu. "Investors are expecting even more new loans and money supplies in February."

In Australia, the main stock index rose 1.3 percent after the government succeeded in pushing a $28 billion economic stimulus package through the Senate following an earlier defeat.

Japan's Nikkei 225 stock average climbed 1 percent to 7,779.40, and Hong Kong's Hang Seng rose 2.5 percent to 13,554.67. Markets in South Korea and Singapore also gained.

U.S. stock futures pointed to a higher open on Wall Street. Dow futures rose 0.4 percent to 7,941 and Standard & Poor's 500 futures were up 0.2 percent at 836.60.

Despite the advance in stock markets, trading was cautious as investors awaited a G7 meeting in Rome that begins Friday and the release next week of Japan's fourth-quarter growth figures. Markets expect the world's second-largest economy to have contracted an annualized 11.7 percent in the last three months of 2008.

In Hong Kong trading, the Chalco unit of Aluminum Corp of China gained 3.3 percent in the wake of the parent company announcing a $19.5 billion deal to enlarge its investment in mining giant Rio Tinto.

Pioneer Corp plunged 20.2 percent in Tokyo after Thursday announcing 10,000 job cuts to cope with sinking sales of car audio equipment and flat-screen TVs and forecasting a 130 billion yen ($1.4 billion) net loss for the year ending March.

Overnight on Wall Street, the Dow Jones industrial average slipped 6.77 to 7,932.76, after falling by more than 245 points in earlier trading, whereas the S&P 500 rose 1.45, or 0.2 percent, to 835.19.

[Associated Press; By LOUISE WATT]

AP Business Writers Stephen Wright in Bangkok and Joe McDonald in Beijing contributed to this report.

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