European markets steady on US recovery optimism

[April 28, 2011]  PARIS (AP) -- Federal Reserve assurances that the U.S. economic recovery is still on track helped support European markets Thursday, despite some bleak economic data from post-earthquake Japan.

Oil prices rose above $113 a barrel to the highest since 2008 as a weakening U.S. dollar made commodities such as crude cheaper for investors with other currencies. The dollar slid against the euro and the yen.

In midday European trading, Britain's FTSE 100 was 0.1 percent higher to 6,073.71. Germany's DAX rose 0.4 percent, and France's CAC-40 was up 0.6 percent to 4,095.28. Futures augured a flat start for Wall Street.

The Fed's promise to keep U.S. interest rates low for an extended period also perked up markets. That is expected to support growth in the world's largest economy -- a major market for export-reliant nations in Asia and Europe.

"With U.S. economic data broadly improving, and the current quarterly earnings season suggesting that corporate America is in pretty good shape, the confirmation of continued accommodative monetary policy should provide an attractive backdrop for further gains across equity markets," Cameron Peacock of IG Markets in Melbourne said in a research report.

A slew of generally robust first-quarter corporate earnings underpinned share price gains in Asia and Europe.

In Europe, business software maker SAP AG said earnings got a boost from its acquisition of mobile software maker Sybase. British Sky Broadcasting shares rose 0.1 percent after it said it added a net 51,000 customers in the quarter, taking its total above 10.1 million.

Trans-Atlantic stock exchange operator NYSE Euronext gained ground after it said higher trading volumes lifted sales while renewed cost-cutting helped improve profitability in the quarter.

Drug maker Sanofi-Aventis was hurt by the drop in sales of its swine flu vaccine compared to a year earlier. Shares in the drug maker slipped 0.2 percent after it reported a 29 percent drop in net profit for the period.

Meanwhile in Asia, Japan's Nikkei 225 index rose 1.6 percent to close at 9,849.74 after strong earnings from big name companies like Sharp helped boost a thirst for Japanese assets.

Bank of China Ltd. reported a hefty 28 percent jump in its first quarter profit, helped by rising interest rates and lending to massive economic stimulus projects.

But Sony Corp. shares tumbled 4.5 percent after a major security breach that may have impacted users around the world. On Tuesday, the company acknowledged that credit card data of PlayStation users may have been stolen in a hack that forced it to shut down its PlayStation Network for the past week, disconnecting 77 million user accounts.

Shares in Panasonic Corp., Japan's biggest home appliance maker, which jumped 2.4 percent after reports said the company will cut its global work force by 40,000.

On Wall Street, stocks rose to another high for the year Wednesday after Federal Reserve Chairman Ben Bernanke said central bank officials expect the economy to continue recovering as the jobs market strengthens.

The Fed said it expects the economy to grow as much as 3.3 percent this year. It now expects the U.S. unemployment rate to fall as low as 8.4 percent by the end of the year. The unemployment is currently at a two-year low of 8.8 percent.

The Fed also announced that its $600 billion bond-buying program would end as scheduled in June and repeated its promise to keep interest rates low for "an extended period."

Benchmark crude for June delivery was up 3 cents at $112.79 a barrel in electronic trading on the New York Mercantile Exchange. Crude reached $113.70 earlier in the session, the highest since September 2008. The contract rose 55 cents to settle at $112.76 per barrel on the Nymex on Wednesday.

In currencies, the dollar's decline deepened after Bernanke signaled that interest rates will stay low. The euro strengthened to $1.4837 from $1.4740 late Wednesday. The dollar weakened to 81.69 yen from 82.24 yen.

[Associated Press; By GREG KELLER]

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