Stocks recover as investors eye US economy

[April 13, 2011]  LONDON (AP) -- Global stocks rose Wednesday ahead of some key U.S. corporate and economic news, and recovering most of the hefty losses from the previous day, when investors fretted about the nuclear crisis in Japan.

Though Tokyo's announcement Tuesday that the Fukushima crisis was as severe as Chernobyl was keeping sentiment in check, investors bought up some beaten-down stocks ahead of earnings from the likes of JPMorgan Chase & Co., U.S. retail sales figures and an economic assessment from the Federal Reserve.

The Fed's monthly report, known as the Beige Book, could have an impact on the markets if there are indications that inflationary pressures are mounting. Any signs that the Fed will take a more hawkish stance could weigh on stocks, which have enjoyed big gains over the past two years as borrowing costs were slashed to record lows and billions of dollars were pumped through the U.S. financial markets.

"It's felt the central bank's anecdotal roundup will be given more significance than usual given the serious concerns about inflationary pressure on the markets," said Will Hedden, a sales trader at IG Index. "Any suggestion that price increases are being passed through could trigger a reversal."

In Europe, the FTSE 100 index of leading British shares was up 0.9 percent at 6,016 while Germany's DAX rose 1 percent to 7,177. The CAC-40 in France was 0.7 percent higher at 4,005.

Wall Street was also poised for a solid advance -- Dow futures were up 0.5 percent at 12,255 while the broader Standard & Poor's 500 futures rose 0.6 percent to 1,316.

In the currency markets, the euro remained buoyant above $1.45 thanks to expectations of further interest rate increases from the European Central Bank despite the debt difficulties afflicting a number of countries.

By late morning London time, the euro was up 0.3 percent at $1.4514. On Tuesday, it broke above $1.45 for the first time since January 2010.

Many analysts think the euro's rally has further legs, provided the Fed doesn't change course anytime soon.

"The divergent policy philosophy between the two central banks overshadows any economic data," said Kit Juckes, head of foreign exchange at Societe Generale.

Meanwhile, the dollar was faring better against the Japanese yen as stocks posted a rally, trading 0.5 percent higher at 84.05 yen.

"As long as risk appetite holds, it is reasonable to expect that Japanese investors will increasingly look off-shore for higher nominal yields," said Jane Foley, senior currency strategist at Rabobank International.

Earlier in Asia, Tokyo's Nikkei 225 rose 0.9 percent to 9,641.18 despite concerns about power shortages following the devastating March 11 earthquake and tsunami and the Japanese government's downgrade of economic growth forecasts. South Korea's Kospi was up 1.6 percent at 2,121.92 and Hong Kong's Hang Seng rose 0.7 percent to 24,135.03.

In mainland China, the Shanghai Composite Index rose 1 percent to 3,050.40, while the Shenzhen Composite Index gained 1.1 percent to 1,286.71.

In the oil markets, prices steadied following dramatic declines over the past couple of days as investors fretted about the impact of sky-high energy and commodity costs on the global economic recovery and signs that a negotiated peace in Libya could be enacted.

Benchmark crude for May delivery was up 29 cents at $106.54 a barrel in electronic trading on the New York Mercantile Exchange. In London, Brent crude for May delivery was up 31 cents to $121.74.

[Associated Press; By PAN PYLAS]

Joe McDonald in Beijing contributed to this report.

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