World stocks up on China, Australia economic news

[September 01, 2010]  LONDON (AP) -- World stocks mostly rose Wednesday after strong manufacturing figures from China and forecast-busting economic growth in Australia shored up optimism ahead of a closely watched survey on the U.S. industrial sector.

With fears growing that the U.S. recovery is running out of steam, the data will be key in shaping investor sentiment ahead of the crucial U.S. jobs data at the end of the week.

In Europe, the FTSE 100 index of leading British shares was up 77.35 points, or 1.5 percent, at 5,302.57 while Germany's DAX rose 64.85 points, or 1.1 percent, to 5,990.07. The CAC-40 in France was 54.57 points, or 1.6 percent, higher at 3,545.36.

Wall Street was poised for solid gains at the open -- Dow futures were up 79 points, or 0.8 percent, at 10,085 while the broader Standard & Poor's 500 futures rose 9.9 points, or 0.9 percent, to 1,058.20.

The rally has been largely due to better than anticipated economic data from around the world.

In China, figures from the state-affiliated China Federation of Logistics and Purchasing showed manufacturing growth up for the first time in four months in August. It said its purchasing managers index -- a gauge of business activity -- rose to 51.7 in August from 51.2 in July. Numbers above 50 show manufacturing activity expanding

Investors were also cheered by figures showing that Australia's economy grew a seasonally adjusted 1.2 percent in the April-June quarter as demand from China and elsewhere in Asia boosted exports of iron ore and other commodities. The rise, the highest for three years, was more than the 0.9 percent anticipated in the markets.

How the markets fare Wednesday, though, will likely hinge on a pair of surveys out of the U.S. -- this week's economic newsflow will likely go a long way toward determining whether the Federal Reserve enacts further stimulus measures.

"Markets are still data driven at the moment and very fickle, so today's gains could easily turn depending on data from the U.S.," said Phil Gillett, a trader at Spreadex.

The monthly jobs survey from the ADP payrolls firm, which will be released before Wall Street opens, will be closely monitored given that it is released two days before official government figures for August -- the consensus in the markets is that around 20,000 private payrolls were added.

Half an hour into the new session, investors will be eyeing the monthly purchasing managers' index from the Institute for Supply Management -- the markets' expectation is that it dropped to 53.0 in August from July's 55.5, in line with the slowdown in economic growth witnessed in other figures.

"Both these figures need to surprise to the upside for investors to dip their collective toes back in the water and become less defensive," said Michael Hewson, market analyst at CMC Markets.

Earlier in Asia, Australia's S&P/ASX 200 index, jumped 2.1 percent to 4,495.70 after the growth figures, though China's Shanghai index dropped 0.6 percent to 2,622.88 as many mainland investors doubted the uptick means the slowdown in China's rapid growth has been halted.

Meanwhile, Japan's Nikkei 225 stock average recovered some of Tuesday's sharp declines -- it closed 102.96 points, or 1.2 percent, at 8,927.02 after hitting a 16-month closing low the previous day.

Elsewhere in Asia, Hong Kong's Hang Seng index rose 0.4 percent to 20,623.83 and South Korea's Kospi advanced 1.3 percent to 1,764.69.

The dollar was up 0.1 percent on the day at 84.05 yen while the euro rose 0.9 percent to $1.2792.

Benchmark crude for October delivery was up 57 cents at $72.49 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.78 to settle at $71.92 a barrel on Tuesday.

[Associated Press; By PAN PYLAS]

AP Business Writer Kelly Olsen in Seoul, South Korea, contributed to this report.

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