World stock markets rebound after string of losses

[November 18, 2010]  LONDON (AP) -- World stock markets rose Thursday as investors grew increasingly confident that details of an Irish financial rescue package will emerge over the coming days and ahead of expected budget cuts by the Greek government.

In Europe, the FTSE 100 index of leading British shares was up 72.64 points, or 1.3 percent, at 5,765.20 while Germany's DAX rose 93.59 points, or 1.4 percent, at 6,793.66. The CAC-40 in France was 58.68 points, or 1.6 percent, higher at 3,851.03.

Wall Street was poised for gains at the open, too -- Dow futures were up 86 points, or 0.8 percent, at 11,081 while the broader Standard & Poor's 500 futures rose 12.5 points, or 1.1 percent, to 1,190.

Once again, the focus remains on Ireland as representatives from the European Union, the European Central Bank and the International Monetary Fund descend on Dublin.

Investors are hopeful that some sort of deal will be thrashed out, especially after the country's central bank governor Patrick Honohan said he expects the country will accept a loan worth tens of billions of euros and Britain, which is not part of the 16-nation bloc that uses the euro, offered to provide additional support.

"The threat of contagion is too intense for EU-IMF-ECB to prevaricate and delay," said Neil MacKinnon, global macro strategist at VTB Capital.

The EU-IMF mission to the Irish capital is intended to identify the size of the hole in state and bank finances and the measures needed to reassure markets that Ireland won't default on debts.

Honohan, speaking in Frankfurt, said he expected the EU-IMF loan -- if approved by the Irish government -- would provide a financial "buffer" for Irish banks that would not be used.

The Dublin talks are expected to last several days.

The hope, at least among policymakers, is that an Irish package, which some estimate at around euro80 billion ($110 billion), would calm markets and ease pressure on the euro.

Analysts remain skeptical that an Irish deal will put an end to the crisis that has engulfed the eurozone over the last year. If recent history is any guide, it's more than likely that another country could be targeted -- under this domino effect, Portugal would be next, followed by even-bigger Spain.

"The to-ing and fro-ing about aid for Ireland has once again underlined that things are far from organised within the eurozone," said Lutz Karpowitz, a currency strategist at Commerzbank. "Should an agreement be reached quickly, which is completely open as there is no time frame, the euro might benefit short term but in the end the money for Ireland is not going to support the euro."

By mid morning London time, the euro was up 0.8 percent at $1.3635. On Wednesday, it had fallen to a seven-week low of $1.3460 as the uncertainty over Ireland remained.

One country that has already been bailed out is Greece, and its government is expected to unveil more spending cuts later as it tries to meet ambitious targets after its deficit figures were revised.

Greece's economy is under strict supervision after the country began receiving funds from a three-year, euro110 billion ($148 billion) package of rescue loans from the International Monetary Fund and the other 15 countries that use the euro. Without the loans, Greece would have defaulted on its debt.

In return, the government has imposed a series of strict austerity measures, including cutting public sector salaries and increasing taxes.

On Monday, Athens increased its projected deficit for 2010 to 9.4 percent of gross domestic product, from the previous target of 8.1 percent, after the EU revised last year's deficit figure to 15.4 percent -- which translates into euro36.15 billion.

Earlier in Asia, stocks advanced, particularly in Japan as exporters benefited from the weaker yen -- by mid morning London time, the dollar was flat at 83.20 yen.

The Nikkei 225 stock average jumped 2.1 percent to close at 10,013.63 while Hong Kong's Hang Seng index closed up 1.8 percent at 23,637.39.

In China, the benchmark Shanghai Composite Index gained 0.9 percent to 2,865.45 while the Shenzhen Composite Index for China's second, smaller exchange jumped 1.8 percent to 1,260.59.

Benchmark oil for December delivery was up $1.47 to $81.91 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.90 to settle at $80.44 on Wednesday.

[Associated Press; By PAN PYLAS]

Associated Press writer Pamela Sampson in Bangkok contributed to this report.

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