World markets kick off 2009 brightly

[January 02, 2009]  LONDON (AP) -- World stock markets kicked off the new trading year brightly Friday as European and Asian indexes rose, though trading volumes remained light with many traders not back at their desks until next week.

The FTSE 100 index of leading British shares was up 39.70 points, or 0.9 percent, at 4,473.87, while Germany's DAX was 68.80, or 1.4 percent, higher at 4,878.00. France's CAC-40 rose 41.90 points, or 1.3 percent, to 3,259.87.

Earlier, Hong Kong's Hang Seng Index led what Asian markets were open higher, vaulting 655.33 points, or 4.6 percent, to 15,042.81. More than half of Asian's markets, including Japan's Nikkei, remained.

Investors remained skeptical that Friday's rally augurs much, if anything, about prospects for 2009 following last year's hefty rout.

"Many will be wanting to start the first trading session of 2009 with a bang but any meaningful direction may be hard to come by," said Jimmy Yates, a dealer at CMC Markets.

The perky early tone in Europe and Asia was expected to largely carry through into the opening U.S. session of the year. Futures markets were predicting that the Dow Jones industrial average would open 87 points, or 1.0 percent, higher at 8,727 but that the broader Standard & Poor's 500 index would dip 5.4 points to 894.70.

Despite a fairly bright ending to the year on many stock markets around the world, many investors remain pessimistic about the world economy as a whole. After one of the worst years ever for global equities, many expect volatility to remain the name of the game for some time to come, especially as the first part of the new year will likely be dominated by mounting economic gloom and massive job losses.

What data there was Friday highlighted the parlous state of the world economy.

In Asia, Singapore said Friday its economy shrank by an annualized rate of 12.5 percent in the fourth quarter of 2008, while China's manufacturing sector, which accounts for 43 percent of the economy, contracted for a fifth straight month in December. Meanwhile South Korea, Asia's fourth-largest economy, suffered a trade deficit for 2008 -- its first in a decade.

And in Europe, manufacturing activity contracted for the seventh month running in December for the countries using the euro, falling at its sharpest rate for at least 11 years, according to the monthly purchasing managers index for the euro-zone.

And in Britain, house prices fell in 2008 at their fastest rate for at least 25 years, the country's biggest mortgage lender HBOS said. Elsewhere, the Chartered Institute of Purchasing and Supply reported that Britain's manufacturing sector, which accounts for around 15 percent of the total economy, suffered its second worst month since 1992 in December.

"It is unfortunate that today's headlines serve as a depressing reminder of the synchronous downturn underway in the global economy," said Neil Mellor, an analyst at Bank of New York Mellon.

Elsewhere in Asia, South Korea's Kospi added 2.9 percent to 1,157.40, Singapore's benchmark rose 3.9 percent, and Mumbai's Sensex traded 0.6 percent higher. Australia was modestly lower.

Markets in Japan, mainland China, Taiwan, Indonesia, the Philippines, Thailand and New Zealand were closed.

Oil prices eased further, with light, sweet crude for February delivery down $2.82 at $41.78. The contract rocketed on New Year's Eve to settle $5.57 higher at $44.60.

In currencies, the dollar strengthened 0.4 percent to 91.14 yen while the euro was 0.4 percent lower at $1.3931.

[Associated Press; By PAN PYLAS]

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

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