US tech earnings drive world markets higher

[September 17, 2010]  LONDON (AP) -- World stock markets mostly rose Friday as positive earnings news from technology companies such as Oracle and BlackBerry maker Research in Motion helped shore up sentiment ahead of key inflation data in the U.S.

In Europe, the FTSE 100 index of leading British shares was up 58.96 points, or 1.1 percent, at 5,599.10 while Germany's DAX rose 63.22 points, or 1 percent, to 6,312.87. The CAC-40 in France was 48.89 points, or 1.3 percent, higher at 3,785.19.

Wall Street was also poised for a solid opening -- Dow futures were up 70 points, or 0.7 percent, to 10,620 while the broader Standard & Poor's 500 futures rose 8.7 points, or 0.8 percent, to 1,131.30.

Sentiment in the U.S. was buoyed by better than expected earnings figures from the likes of Oracle Corp., the world's second biggest software company, and Research in Motion Ltd., the maker of BlackBerry handsets.

The technology sector is widely seen as a bellwether of the recovery, as companies' and households' demand for new technology rises as the economic outlook brightens.

"Earnings news from the tech sector also beat expectations helping add to the upside," said Ben Potter, a market strategist at IG Markets.

Over the past week or so, stocks have rebounded as fears of a return to recession in the U.S. -- the so-called 'double-dip' -- have diminished after a run of solid economic data. However, the prevailing view is that the recovery will continue to be fairly subdued that may require further action from policymakers, both in government and at the U.S. Federal Reserve.

In that context, U.S. inflation data could have a bearing on next week's meeting of the Fed's rate-setting committee and whether it will indicate further monetary easing measures later in the year.

"We need to see evidence of further disinflation -- so today's CPI data is important -- as well as deterioration in the labor market," said Neil MacKinnon, global macro strategist at VTB Capital. "So far, U.S. economic data flow is at least consistent with slowdown in activity though not yet a 'double dip'."

The consensus in the markets is that consumer price rose a monthly 0.3 percent in August for a 1.1 percent annual gain -- the latter remains low on a historical perspective.

There will also be interest in the University of Michigan's preliminary estimate of U.S. consumer sentiment in September. Here, the consensus is that the main index rebounded to 70 from August's 68.9. Even if the expected rise materializes, the index will still be way below the long-run average of 86.3.

"With an unemployment rate of 9.6 percent, who can blame them?" said Rabobank International analyst Philip Marey.

Analysts also noted that trading later could be complicated by the fact that a number of futures and options expire in Europe and the U.S.

Earlier in Asia, Japan's benchmark Nikkei 225 stock average gained 116.59 points, or 1.2 percent, to 9,626.09 as exporters continued to move higher in the wake of the Bank of Japan's decision earlier this week to intervene directly in the currency markets to stem the export-sapping appreciation of the yen.

By mid morning London time, the dollar was unchanged on the day at 85.80 yen, way up from the 82.87 yen 15-year low it was trading at before the intervention.

One side-effect of the intervention has been a strengthening in the euro against the dollar. The euro was up 0.4 percent at $1.3133, having earlier hit a five week high of $1.3159.

Analysts said that Japan's defense of its currency, its first intervention in six years, has made the euro a favorite bet with traders against the dollar.

Elsewhere in Asia, South Korea's Kospi rose 0.9 percent to 1,827.35, Hong Kong's Hang Seng added 1.3 percent to 21,970.86 and Australia's S&P/ASX 200 advanced 0.7 percent to 4,638.90.

Benchmark crude for October delivery was up 42 cents at $74.99 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost $1.45 to settle at $74.57 a barrel on Thursday.

[Associated Press; By PAN PYLAS]

Associated Press writer Alex Kennedy in Singapore contributed to this report.

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