World stock gains limited by weak European data

[May 15, 2009]  LONDON (AP) -- World markets were mostly higher Friday, although gains in Europe were limited by more dismal economic data showing the euro zone's economy shrank by a massive 2.5 percent in the first quarter.

Although investors are showing a resilient appetite for global stocks on hopes for an economic recovery later this year, the European growth data dampened optimism and kept the region's indexes from rising as much as Asian markets.

In European morning trading, Germany's DAX was up 0.4 percent at 4,755.11, while Britain's FTSE 100 was 0.7 percent higher at 4,391.33. In France, the CAC 40 rose 0.8 percent at 3,182.35.

Friday's growth statistics mean the euro zone has now seen economic output decline for four consecutive quarters.

The recession deepened as global trade dropped off sharply, with exporters like Germany, the euro zone's biggest economy, badly hit. In the first quarter, Germany's economy shrank 3.8 percent as demand for its high value goods, such as cars and machinery, collapsed.

France was confirmed to be in a recession, its longest since 1949, after a 1.2 percent drop in economic activity in the first quarter, while Britain shrank by 1.9 percent.

Howard Archer, chief European and U.K. economist at IHS Global Insight, said the figures were "even worse than widely expected" and dragged down by Germany's slump in exports.

But he added the bottom may have been reached. "This should mark the nadir in the euro zone's recession as there are mounting signs that the rate of contraction is now moderating appreciably," he said.

Meanwhile, reports in London that Barclays PLC is discussing the possible sale of its Barclays Global Investments unit caused its shares to rise as much as 9 percent. The Financial Times said Barclays was discussing a potential $10 billion sale of the unit with New York-based BlackRock Inc.

Stock markets were also higher in Asia, where investors were encouraged by data showing Japanese machinery orders in March fell less than expected.

Analysts said investors' hopes for a rebound in growth later this year were proving robust, even in the face of weak U.S. retail sales data, which earlier this week showed American consumers -- one of the engines of world growth -- are not yet ready to spend again.

"Investors tend to look ahead and they don't want to get caught out during the recovery. That's why you're seeing some resilience," said Lorraine Tan, director of equities research at Standard & Poor's in Singapore.

Japan's Nikkei 225 stock average gained 171.29 points, or 1.9 percent, to 9,265.02, and Hong Kong's Hang Seng added 249.01, or 1.5 percent, to 16,790.70.

In other markets, South Korea's Kospi edged up 0.8 percent, Australia's index gained 1.3 percent and Taiwan's market rose 2 percent.

Exporters, including electronics and auto makers, were among the top gainers in Tokyo trade, as the yen's strength abated. Sony Corp. soared 7.1 percent, Sharp Corp. surged 6.1 percent and Toyota Motor Corp. gained 2.3 percent.

Wall Street futures also pointed to a higher open in the U.S. Friday. Dow futures were up 18 points at 8,305 and Standard & Poor's 500 futures rose 1.9 to 891.40.

Overnight, the Dow rose 46.43, or 0.6 percent, to 8,331.32. The S&P 500 index rose 9.15, or 1 percent, to 893.07, while the Nasdaq rose 25.02, or 1.5 percent, to 1,689.21.

Oil prices hovered below $59 a barrel Friday in Asia as signs of a weak U.S. economy led investors to mull whether this month's crude rally was justified. Benchmark crude for June delivery was up 11 cents at $58.73; the contract climbed 60 cents overnight.

In currencies, the dollar weakened to 94.87 yen from 96.08. The euro was lower at $1.3554.

[Associated Press; By CARLO PIOVANO]

Associated Press writer Jeremiah Marquez in Hong Kong contributed to this report.

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