Asia, Europe markets edge higher after US rally

[March 18, 2009]  SHANGHAI (AP) -- Most Asian and European markets rose modestly Wednesday after an overnight surge on Wall Street, while Tokyo shares were buoyed by fresh support for the wobbly financial system from the Japanese central bank.

Hong Kong's Hang Seng index led the region, gaining 239.08 points, or 1.9 percent, to 13,091.03, while Tokyo's benchmark Nikkei 225 stock average added 23.04 points, or 0.3 percent, to 7,972.17.

The Japanese central bank said it was increasing its purchase of government bonds to keep ample cash in the monetary system following a two-day meeting where it also decided to keep its key interest rate at 0.1 percent. The Bank of Japan also said it was considering providing loans to commercial banks as way to shore up their capital bases.

"Investors took heart from the bank's moves. The Bank of Japan is not sitting still. It is taking action aggressively to ensure the smooth liquidity in the financial market," said Masatoshi Sato, a strategist at Mizuho Investors Securities Co. Ltd.

South Korea's Kospi rose 0.5 percent to 1,169.95, while Shanghai's benchmark Composite Index added 0.2 percent to 2,223.73.

Australia's benchmark S&P/ASX 200 dipped 0.2 percent after miner Rio Tinto dropped 8.7 percent on worries over its deal with Aluminum Corp. of China.

In Europe, Britain's FTSE 100 dipped 0.1 percent, while Germany's DAX rose 1.2 percent and France's CAC 40 advanced 0.8 percent.

Wall Street got a surprise boost Tuesday, posting its fifth gain in six trading sessions, from a government report that home construction picked up in February. The news, which was unexpected, injected new vitality into a week-old rally.

Asian markets also have advanced strongly in recent sessions on signs of improvement among major U.S. and European banks. But many analysts are cautious and believe the rally has run its course for now.

"The rebound has almost reached its limit," said Castor Pang, an analyst at Sun Hung Kai Financial in Hang Seng, noting that turnover in most markets is not rising quickly enough to suggest a recovery.

Mainland China's advance faltered toward the middle of the day, although higher commodity prices pushed up shares of metal and coal companies. Major steel maker Baoshan Iron & Steel gained 0.9 percent and Jiangxi Copper Ltd. soared 5.5 percent. But major banks fell back, with Bank of China slipping 0.8 percent and Shanghai Pudong Development Bank falling 1.3 percent.

The World Bank cut its forecast of China's 2009 growth from 7.5 percent to 6.5 percent due to plunging exports. But World Bank economists expressed confidence in Beijing's ability to keep the world's third-largest economy expanding amid global turmoil.

"We see China as a relative bright spot in a rather gloomy global economic picture," said David Dollar, the bank's country director for China.

As the market closed, Japanese electronics company Toshiba Corp. said it was naming a new president in a management reorganization aiming at dealing with Japan's crippling recession. The company's stock rose 0.4 percent.

In New York Tuesday, the Dow Jones industrial average jumped 179 points, or 2.5 percent, to 7,395.70. The Standard & Poor's 500 index climbed more than 3 percent.

U.S. stock index futures were down, pointing to a lower open on Wall Street Wednesday. Dow futures were down 32 points, or 0.4 percent, while S&P 500 futures were down 4 points, or 0.5 percent.

Oil prices fell in Asian trading, with benchmark crude for April delivery falling 39 cents to $48.77 a barrel by midday in Singapore on the New York Mercantile Exchange.

In currencies, the dollar fell to 98.56 yen from 98.79 yen late Monday in New York, while the euro rose to $1.3040 from $1.3031.

[Associated Press; By ELAINE KURTENBACH]

AP Business Writer Joe McDonald in Beijing, Associated Press Writer Shino Yuasa in Tokyo and Associated Press researcher Ji Chen in Shanghai contributed to this report.

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