Rising commodity prices boost European markets

[June 26, 2009]  LONDON (AP) -- Rising commodity prices pushed European markets higher on Friday, while Asian stocks were helped by an overnight recovery on Wall Street as strong corporate profits buttressed optimism about the world's largest economy.

In morning trading, Britain's FTSE 100 was up 1 percent at 4,293.50, Germany's DAX added 1 percent to 4,850.63 and France's CAC 40 rose 0.7 percent to 3,185.27.

Wall Street futures were slightly weaker. Dow Jones industrial average futures were down 0.1 percent to 8,410 and Standard & Poor's 500 futures were unchanged at 916.60.

Energy stocks helped European and Asian indexes as crude oil prices traded near $71 a barrel. Shares in Shell rose 0.9 percent, BP climbed 0.8 percent, and Total jumped 1 percent.

Benchmark crude for August delivery was up 95 cents to $71.18 in European trading as investors weighed mixed signs about the strength of the U.S. economy and crude demand. On Thursday, crude gained $1.56.

Meanwhile, a rise in metal prices helped mining stocks, with XStrata gaining 4.3 percent, Antofagasta 2.2 percent and Anglo American 1.6 percent in London.

Among the losers, UBS AG slipped 0.6 percent after the Swiss bank announced overnight that it expects to raise 3.8 billion Swiss francs ($3.5 billion) through a capital increase and forecasts a loss for the second quarter.

More generally, investors were generally encouraged after U.S. markets on Thursday snapped a four-day losing streak with the help of better-than-expected earnings from homebuilder Lennar Corp. and home furnishings chains Bed Bath & Beyond Inc.

The news underpinned hopes that consumer spending, one of the engines of U.S. growth, was picking up after falling over the last year. It also helped investors shrug off another bleak sign that unemployment is rising.

Despite the gains, some analysts don't expect the rally that began in March and tapered off this month to resume anytime soon.

"I think many investors are waiting for more confirmation that the macro economies are recovering," said Winson Fong, managing director at SG Asset Management in Hong Kong, which oversees about $2 billion in equities in Asia. "Without the fundamentals it's hard to see us moving sharply in one direction or the other right now."

"We have seen the markets quite volatile -- they can't really make their minds up if they are going up or down," added Jane Coffey, head of equities at Royal London Asset Management. "We had a strong rally from the March lows and although we have continued to see reasonable forward-looking economic data ... the big question now is how strong is the recovery going to be when it starts."

In Asia, Japan's Nikkei 225 benchmark inched higher by 81.31, or 0.8 percent, to 9,877.39 and Hong Kong's Hang Seng added 325.23, or 1.8 percent, to 18,600.25.

Elsewhere, Korea's Kospi gained 0.1 percent, Australia's benchmark rose 1.2 percent and India's Sensex turned higher by 1.5 percent.

Shares of Bridgestone Corp. were among the day's biggest gainers in Tokyo, soaring 8.5 percent.

The tiremaker said it now expects a net loss of 46 billion yen ($479 million) for the January-June half, a big improvement from the 62 billion yen loss it had projected earlier. The company cited cost cuts and lower commodity prices for the upward revision.

Overnight in the U.S, the Dow rose 172.54, or 2.1 percent, to 8,472.40, after falling 40 points in the early going. It was the biggest point and percentage gain for the blue chips since June 1.

The broader Standard & Poor's 500 index rose 19.32, or 2.1 percent, to 920.26.

[Associated Press; By LOUISE WATT]

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

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