European markets lifted by industrial output data

[March 12, 2010]  CONDON (AP) --  European stock markets rose Friday after a strong set of industrial production figures for January stoked hopes that the recovery from recession in the 16 countries that use the euro may be stronger than previously thought.

The FTSE 100 index of leading British shares was up 18.60 points, or 0.3 percent, at 5,635.86 while Germany's DAX rose by 35.62 points, or 0.6 percent, to 5,964.25. The CAC-40 in France was 23.81 points, or 0.6 percent, higher at 3,952.76.

The euro was equally buoyant, spiking to a one-month high against the dollar after official figures showed that industrial production in the eurozone soared by a record 1.7 percent in January from the previous month.

With December now showing a 0.6 percent increase instead of a 1.7 percent fall, the annual rate turned positive for the first time since April 2008.

By late morning London time, the euro was 0.8 percent higher at $1.3786.

The attention in the markets later will center on key U.S. retail sales and consumer sentiment figures.

These should shine a light on the state of consumption in the U.S. The U.S. consumer is particularly important for the U.S. economy as retail spending accounts for around 70 percent of the world's largest economy.

"We will get a closer look in to how the U.S. consumer is behaving as talk of economic recovery continues to gather pace," said James Hughes, market analyst at CMC Markets.

However, with heavy snow during February, particularly on the North East coast, the consensus in the markets is for a modest monthly decline in retail sales.

Wall Street was set to open modestly higher at the open following a late advance on Thursday -- however, the actual open may well hinge on how the retail sales figures turn out.

For now, Dow futures were up 22 points, or 0.2 percent, at 10,570 while the broader Standard & Poor's 500 futures rose 2.6 points, or 0.2 percent, at 1,148.50.

On Thursday, the S&P 500 advanced 0.4 percent, to 1,150.24, above its Jan. 19 close of 1,150.23 -- many analysts think the index's break above the 1,150 mark could augur further gains. The S&P now stands at its highest level since Oct. 1, 2008.

David Jones, chief market strategist at IG Index, thinks that next week's trading could well depend on whether the Dow Jones industrial average sustains its break above 10,600.

"This had proved quite a barrier to progress over recent days and a finish above here today could position global stock markets for more growth next week," said Jones.

Earlier, there was no clear direction in Asia, though Japan's Nikkei 225 stock average advanced 86.31 points, or 0.8 percent, to close at a seven-week high of 10,751.26.

The lackluster performance elsewhere was largely due to concerns that China may start raising interest rates and take other cooling measures to keep a lid on mounting inflationary pressures. The source of concern was a government report showing inflation in the fast-growing economy jumped to 2.7 percent last month.

Chinese shares led the declines in Asia, with Shanghai's index falling 1.2 percent. Investors there sold property shares on concerns higher-than-expected inflation might lead the government to hike in interest rates.

"Overheated industries, such as the real estate sector and some heavy industries, will be cooled as the government adjusts its macroeconomic policies, so those shares dropped heavily today," said Peng Yunliang, an analyst at Shanghai Securities in Shanghai.

Hong Kong's Hang Seng fell 0.1 percent at 21,209.74 and South Korea's benchmark gained 0.4 percent at 1,656.74.

Oil prices pushed higher as investors mulled whether extending a monthlong rally is justified amid evidence of weak U.S. crude demand. Benchmark crude for April delivery added 57 cents to $82.68.

[Associated Press; By PAN PYLAS]

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

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