World stocks rise as China manufacturing jumps

[October 01, 2010]  SINGAPORE (AP) -- World stock markets rose Friday as stronger growth in Chinese manufacturing suggested the world's No. 2 economy isn't slowing as sharply as feared.

European markets opened higher, following Asia's advance, while oil prices extended gains to rise above $80 a barrel on hints in U.S. economic indicators of stronger demand for fuel.

Providing a lift to sentiment was news that growth in China's manufacturing gathered pace in September, easing fears of a significant slowdown in the world's No. 2 economy. Japan added to the optimism by reporting a fall in unemployment.

Economic indicators from the U.S. were also brighter: Chicago area manufacturing jumped in September, first-time claims for unemployment benefits fell more than expected last week, and second-quarter economic growth was revised slightly higher.

Wall Street, meanwhile, chalked up its best September in 71 years on Thursday even after key indexes ended the month on a weak note as investors locked in profits from a multi-week rally.

In early European trading, the FTSE 100 index of leading British shares rose 0.7 percent to 5,587.00, Germany's DAX gained 0.6 percent to 6,265.28 and the CAC-40 in France was up 0.6 percent at 3,738.25.

Wall Street was set to gain. Dow futures added 50 points, or 0.5 percent, to 10,773.00. Broader S&P futures advanced 5.5, or 0.5 percent, to 1,142.30.

In Asia, Japan's benchmark Nikkei 225 stock average climbed 34.88, or 0.4 percent, to 9,404.23.

The index held firm after the government said Japan's jobless rate improved in August, falling to 5.1 percent from 5.2 percent in July and marking the second straight month of decline.

South Korea's Kospi added 0.2 percent to 1,876.73 while Australia's S&P/ASX 200 slipped 0.1 percent to 4,579.20.

Stocks markets in Hong Kong and China were closed for public holidays. Mainland Chinese markets will reopen on Oct. 8.

Elsewhere, markets in Taiwan, India, Malaysia, Singapore and Indonesia all advanced.

Capital inflows into Asian stock markets jumped last month as investors sought to take advantage of the region's high economic growth rate.

Asian central banks will likely intervene in coming weeks to slow the rate of currency appreciation but a big push to weaken currencies outright is unlikely, Capital Economics said in a report. "We continue to expect that regional currencies and emerging Asia equity markets will eventually climb further."

In New York on Thursday, the Dow Jones industrial average fell 47.23 points, or 0.4 percent, to 10,788.05 as investors locked in profits.

In currencies, the dollar fell to 83.27 yen from 83.51 yen late Thursday in New York. The euro rose to $1.3715 from $1.3623.

Benchmark oil for November delivery rose 63 cents to $80.60 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $2.11 to settle at $79.97 a barrel on Thursday.

[Associated Press; By ALEX KENNEDY]

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