World markets up ahead of ECB meeting, US earns

[February 04, 2010]  LONDON (AP) -- World stock markets rose modestly Thursday ahead of a European Central Bank meeting and a closely watched earnings statement from chipmaker Intel Corp.

In Europe, the FTSE 100 index of leading British shares was up 28.39 points, or 0.5 percent, at 5,501.87 while Germany's DAX rose 33.52 points, or 0.6 percent, to 5,996.66. The CAC-40 in France was 19.60 points, or 0.5 percent, higher at 4,020.46.

Wall Street was also poised to open modestly higher following modest gains on Wednesday -- Dow futures were up 8 points, or 0.1 percent, at 10,636 while the broader Standard & Poor's 500 futures rose 1 point, or 0.1 percent, to 1,142.60.

Sentiment has been positive since late Wednesday, when a U.S. Federal Reserve report painted a more positive assessment of the U.S economic recovery. That helped the Dow Jones industrial average close at a 15-month high.

European investors in particular will be interested to see if the European Central Bank president Jean-Claude Trichet is also a bit more optimistic at his press briefing later.

The central bank is not expected to touch rates, currently at a historic low of 1 percent, but investors will look to see if Trichet signals a policy change in the near future.

"It will be interesting to hear whether there are indications that this year will see any increase in the base rate," said Anthony Grech, market strategist at IG Index.

Trichet will also be quizzed about the levels of government debt in a number of countries on the periphery of the single currency zone, in particular Greece.

A scathing report Tuesday by the European Commission on the unreliability of Greece's budgetary data reignited speculation that Greece may need to be bailed out by its partners in the European Union or even be compelled to leave the single currency bloc.

Attention will also continue to focus on earnings statements to see if the increasing optimism on Wall Street, which has driven a ten-month bull run in stock markets, is justified by the fundamentals.

The key earnings statement Thursday will be Intel's, which will reveal its results in an after-hours statement.

Earlier this week, aluminum company Alcoa Inc. saw its share price tumble 11 percent after it reported lower than expected earnings for the fourth quarter.

"After Alcoa's weaker numbers on Monday many will be nervous ahead of this release as any weaker numbers could dent confidence further as fears are already growing that we could see a disappointing earnings season," said James Hughes, market analyst at CMC Markets.

Earlier in Asia, stocks rallied amid receding worries about credit-tightening in China and Australia's economic recovery showed new momentum.

Economists say, China's planners are likely to confine tightening to technical tinkering to discourage excess lending and will likely wait some time before raising benchmark interest rates or cutting back on the government stimulus spending credited with helping revive domestic demand and creating jobs.

"Investors realized they were overreacting and tended to think the hike is necessary for the good of Chinese economy amid inflation expectations," said Zhang Xiang, an analyst for Guodu Securities in Beijing.

Japan's Nikkei 225 stock average led Asia's gains, jumping 172.65, or 1.6 percent, to 10,907.68. That was despite news that core machinery orders -- a closely watched indicator of corporate capital spending -- slumped to a record low in November as anemic domestic demand kept companies cautious.

South Korea's Kospi added 0.9 percent to 1,685.77. Australia's market rose 0.6 percent after new figures showed that the unemployment rate unexpectedly fell to 5.5 percent in December and thousands of new jobs were created.

Singapore's benchmark was up 0.7 percent but Hong Kong's Hang Seng gave up early gains to close down 31.65, or 0.2 percent, at 21,716.95. China's Shanghai index rose 42.89 points, or 1.4 percent, to finish at 3,215.55.

Oil prices climbed back towards $80 a barrel as rising stock markets ahead of fourth quarter earnings cheered crude traders. Benchmark crude for February delivery was up 34 cents to $79.99 in electronic trading on the New York Mercantile Exchange; the contract gave up $1.14 to settle at $79.65 on Wednesday.

The dollar rose 0.5 percent to 91.89 yen while the euro was flat at $1.45.

[Associated Press; By PAN PYLAS]

AP Business Writer Stephen Wright in Bangkok contributed to this report.

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