World markets rise at start of new week

[July 27, 2009]  LONDON (AP) -- World stock markets rose again Monday amid ongoing hopes that corporate earnings will outperform expectations and give another signal that the global recession is loosening its grip.

In Europe, the FTSE 100 index of leading British shares was up 7.75 points, or 0.2 percent, at 4,584.36 with publishing group Pearson PLC up around 10 percent after it raised its earnings guidance for the year despite testing market conditions.

However, Rexam PLC, Europe's biggest maker of cans for the drinks industry, slid over 10 percent after it confirmed it may raise 350 million pounds via the issue of new shares to help it pay down its debt burden.

Meanwhile, France's CAC-40 index was 18.61 points, or 0.6 percent, higher at 3,385.06 while Germany's DAX jumped 58.33 points, or 1.1 percent, to 5,287.69, with Commerzbank AG the biggest riser after it sold its Swiss Dresdner Bank unit to the LGT Group of Liechtenstein. Commerzbank shares rose 7 percent.

Stocks around the world have rallied strongly over the last couple of weeks after better than expected U.S. earnings pushed many of the world's leading indexes to 2009 highs amid hopes that the worst of the recession was over. Equities usually rally around 6-9 months before actual economic growth emerges.

While most of the focus has centered on U.S. earnings, the European reporting season really kicks into gear this week, providing investors with crucial insights about whether the recession is easing as much as it apparently is in the U.S.

Among others, steel company Arcelor Mittal, Deutsche Bank AG, carmaker Daimler AG, chemical company BASF SA and France Telecom SA will report their earnings in coming days and investors will be interested to see if the recent improvement in forward-looking surveys is being felt in the real world.

It's a quieter week in the U.S. than of late though there will be a lot of interest in earnings from the likes of media company Time Warner Inc., Dow Chemical Co., Colgate-Palmolive Co and ExxonMobil Corp.

Despite the early gains this week, analysts warned that the markets may well take a breather and book some profits accumulated over the last couple of weeks.

"It seems holding on to those gains may be the biggest issue as at one point traders will look to book profits on the recent rally," said Jimmy Yates, head of equities at CMC Markets.

At the moment, the rally was set to continue on Wall Street. Dow futures were up 33 points, or 0.4 percent, at 9,091 while the broader Standard & Poor's 500 futures rose 3.1 points, or 0.3 percent, to 980.90. Both would set new highs for 2009 should they open as solidly as anticipated by the futures markets.

Earlier, Asian markets extended their winning streak, with many of the major indexes up 1 percent or more.

Tokyo's Nikkei 225 stock average added 144.11 points, or 1.5 percent, to 10,088.66, and Hong Kong's Hang Seng rose 268.83, or 1.4 percent, to 20,251.62.

South Korea's Kospi gained 1.4 percent and Australia's stock measure was up by 1.2 percent.

In Shanghai, the main index climbed 1.9 percent, buoyed by the strong performance of the first company to list on China's main stock exchange in 11 months.

Sichuan Expressway Co. surged 324 percent to 15.25 yuan ($2.22) per share before falling back to end the day at 10.90 yuan ($1.59) -- still a 203 percent gain over the price that shares were sold for in its initial public offering. The company was the first to start trading in Shanghai since regulators ended a ban on IPOs in June.

"I'm speechless. Even the most optimistic investors wouldn't have expected such a high price," said Cao Xuefeng, an analyst for Huaxi Securities in the western city of Chengdu.

Investor hunger for riskier assets extended to commodities, with benchmark crude for September delivery gaining 47 cents to $68.52 barrel in electronic trading on the New York Mercantile Exchange. On Friday, the contract rose 89 cents.

The dollar rose 0.4 percent to 95.14 yen while the euro was up 0.3 percent at $1.4261.

[Associated Press; By PAN PYLAS]

AP Business Writer Jeremiah Marquez in Hong Kong and Associated Press researcher Bonnie Cao in Beijing contributed to this report.

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