European stocks follow Wall Street futures higher

[May 12, 2009]  LONDON (AP) -- European stocks made small gains Tuesday as investors remained wary of pushing markets too much higher ahead of a raft of key U.S. retail news.

By midmorning London time, the FTSE 100 index of leading British shares was up 12.62 points, or 0.3 percent, at 4,448.12, while Germany's DAX rose 45.26 points, or 0.9 percent, at 4,912.17. The CAC-40 in France was 5.82 points, or 0.2 percent, higher at 3,254.49.

European stocks opened lower but moved higher when Wall Street futures started pointing to gains at the open later.

Dow futures were up 37 points, or 0.4 percent, to 8,439 while the Standard & Poor's 500 futures rose 3.90 points, or 0.4 percent, to 912.90.

The anticipated gains on Wall Street come after U.S. stocks suffered one of their worst days in recent weeks on Monday, when the Dow Jones industrial average closed down more than 150 points to 8,418.77 amid widespread profit-taking.

"Although equity markets were weaker, there was no particular drama to the moves and no sense that the markets earlier optimism has cracked in a lasting way," said Daragh Maher, an analyst at Calyon Credit Agricole.

"There simply has not been enough news to provoke a rethink but equally not enough fresh fuel to propel the equity market higher," he added.

Stocks around the world have rallied strongly over the last few weeks -- with some major indexes now in positive territory for the year -- prompting some investors to claim the markets are over the worst. Many markets ended last week more than 5 percent higher.

The trigger for the gains has been better than expected economic news, particularly in the U.S., the world's largest economy. Mounting hopes that the global economy may recover before the year's end has fueled an increased appetite for risk. Stock markets usually start recovering between 6-9 months before an actual economic recovery emerges.

Markets have also been buoyed by indications that the banks are now in much better health to deal with any potential losses associated with the recession after raising significant amounts of cash.

Investors will be keeping a close eye on the U.S. this week to see if the recent run of better than expected news continues when a raft of retailers report quarterly earnings. First-quarter earnings figures are expected from, among others, Wal-Mart Stores Inc. and Macy's Inc. while the Commerce Department reports retail sales for April.

Without the support of the U.S. consumer, which accounts for around 70 percent of the U.S. economy and 20 percent of the global economy, any recovery will soon fizzle out.

Earlier, most Asian markets ended down amid widespread profit-taking with Japan's Nikkei 225 stock average closing down 153.37 points, or 1.6 percent, to 9,298.61 and South Korea's Kospi ending 0.8 percent lower at 1,403.51.

Greater China stocks fluctuated throughout the day before turning higher, with Hong Kong's Hang Seng edging up 65.69 percent, or 0.4 percent, to 17,153.64 and Shanghai's benchmark adding 1.5 percent to 2,618.17. Many investors looked past figures showing a 23 percent decline in exports in April and focused on other data pointing to huge increases in investments in property, factories and other fixed assets, helped by a flood of government-directed stimulus.

Elsewhere, Australia and Taiwan lost 1.2 percent and 3.2 percent, respectively.

Oil prices gained in Asia, with benchmark crude for June delivery up 97 cents to $59.47 a barrel. The contract lost 13 cents to settle at $58.50 overnight.

The dollar gained to 97.69 yen from 97.60 yen. The euro was higher at $1.3661 from $1.3645.

[Associated Press; By PAN PYLAS]

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

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