Chinese export growth boosts world markets

[February 04, 2010]  LONDON (AP) -- World stock markets rose strongly Monday after a surprisingly strong rebound in China's exports reinforced hopes about the pace of the global economic recovery as attention began to focus on the start of fourth-quarter earnings reports in the U.S.

In Europe, the FTSE 100 index of leading British shares was up 45.05 points, or 0.8 percent, at 5,579.29 while Germany's DAX rose 46.17 points, or 0.8 percent, to 6,083.78. The CAC-40 in France was 37.33 points, or 0.9 percent, higher at 4,082.47.

Wall Street was set to join Europe and Asia higher too, with Dow futures up 48 points, or 0.5 percent, at 10,614 while the broader Standard & Poor's 500 futures rose 6.2 points, or 0.5 percent, to 1,147.80.

Sentiment around the world appears to have been buoyed by the news that China exports in December jumped nearly 18 percent, way more than the 5 percent increase expected in the markets and the first increase in more than a year.

"Markets have taken this as confirmation that global recovery is still based on solid foundations," said Anthony Grech, market strategist at IG Index.

The export data helped ease some of the concerns that emerged Friday after figures showed that 85,000 U.S. jobs were lost in December, which was substantially higher than the 10,000 or so predicted in the markets.

However, some of the sting was taken out of the news by the revision to November's figures to show that there actually positive jobs growth of 4,000, instead of the initial estimate of 11,000 losses.

Investors will be keeping a close eye on the start of the fourth-quarter earnings season to see if the increasing optimism on Wall Street, that has seen stocks enjoy a ten-month bull run, is justified by the fundamentals.

As usual, aluminum company Alcoa Inc. kicks off the results season later Monday.

Nicholas Colas, chief market strategist at ConvergEx Group, said much of the attention will be on whether companies are witnessing improvements in sales, with the consensus of analysts forecasts pointing to a 7.6 percent increase in fourth quarter revenues compared with the same three-month period in 2008.

"The real story will be on the top of the income statement, however, rather than the bottom," said Colas.

The key driver to stock market performance, at least in the first part of the year, will likely be whether economic and corporate figures, particularly out of the U.S., back up the optimism that is evident in company valuations.

Stock markets around the world have rallied strongly since March's lows -- the Dow and the S&P 500 for example surged more than 60 percent since then -- as investors grew more optimistic about the global economic recovery after central banks and governments pushed through extraordinary policy measures to mitigate the deepest recession since World War II.

Earlier in Asia, Hong Kong's Hang Seng benchmark climbed 114.77 points, or 0.5 percent, to 22,411.52 and Shanghai's main index added 16.75 points, or 0.5 percent, to 3,212.75. As well as the export data, Chinese markets were also supported by news regulators were moving ahead with plans for stock futures and other trading products that could make the market more attractive to investors.

Japan's stock market was closed for a holiday.

Elsewhere, Singapore's market rose 0.3 percent and Australia's index was up 0.8 percent. South Korea's Kospi benchmark gave up early gains to close down 0.1 percent at 1,694.12.

Oil prices jumped amid signs of strong Chinese demand for crude and rebel attacks on Nigerian supplies. Benchmark crude for February delivery was up 82 cents to $83.57.

The dollar continued to weaken following the U.S. jobs data, which reined in expectations of when the U.S. Federal Reserve will start raising interest rates.

The dollar was down 0.1 percent at 92.43 yen while the euro was 0.7 percent higher at $1.4530.

[Associated Press; By PAN PYLAS]

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

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.