World stocks advance on earnings, higher oil price

[February 01, 2011]  BANGKOK (AP) -- World shares moved higher Tuesday after overnight gains on Wall Street offset worries about political unrest in Egypt and the prospects of an imminent interest rate hike by China's central bank appeared to fade.

Oil prices hovered near $92 a barrel amid concerns a power struggle in Egypt, which has been rocked by anti-government protests, could shut the Suez Canal -- a major route for oil tankers to Europe and North America. In currencies, the dollar was lower against the yen and the euro.

In early European trading, Britain's FTSE 100 was 0.8 percent higher at 5,908.23. Germany's DAX rose 0.7 percent to 7,129.51. France's CAC-40 was up 0.7 to 4,031.82.

The momentum was shared by Wall Street, which was set to open higher later in the day. Dow futures were up 0.2 percent to 11,861 and S&P 500 futures rose 0.2 percent to 1,285.50. Quarterly financial results were due to be released later in the day by AOL Inc., Time Warner Inc. and Visa, among others.

Japan's Nikkei 225 stock average rose 0.4 percent to close at 10,274.50, rebounding from a sharp drop the previous day. Higher crude prices sent oil-related shares climbing.

Investors also bought companies that reported solid earnings. Hitachi Ltd. soared 3.6 percent after the Nikkei financial daily reported that its October-December operating profit likely hit an all-time high. Honda Motor Co. rose 2 percent after lifting its full-year profit forecast.

Hong Kong's Hang Seng index added 0.2 percent to 23,482.95, pushed higher by energy companies. Among the top active shares were CNOOC Ltd., China's state-owned offshore oil and gas company, up 2.7 percent, and PetroChina Ltd., China's biggest oil and gas producer, up 2.6 percent.

Speculation that China would raise interest rates before the Lunar New Year holiday begins Wednesday had dampened Chinese markets for weeks. But analysts now say the unrest in Egypt has given the Chinese central bank a reason to hold off until after the holiday -- handing traders an excuse to grab last-minute bargains before markets close later this week.

"I think the chance of a rate hike before the New Year holiday is unlikely because of the crisis in Egypt," said Kwong Man Bun, chief operating officer at KGI Asia Ltd. in Hong Kong. "The Egypt crisis could have long-term impact if not handled properly, so the Chinese government is concerned."

Some investors also believe a higher opening following the New Year will bring good luck -- all the more reason for bargain-hunting in the last hours of trading.

South Korea's Kospi rose a slim 0.1 percent to 2,072.03 and the Shanghai Composite index inched up 0.3 percent to 2,798.96. Benchmarks in New Zealand, Singapore and Indonesia also gained.

In New York Monday, the Dow Jones industrial average gained 68 points, or 0.6 percent, to close at 11,891.93. Energy stocks led indexes higher Monday after Exxon Mobil Corp. reported its most profitable quarter since 2008.

The broader Standard and Poor's 500 index rose 0.8 percent to 1,286.12. The Nasdaq composite index gained 0.5 percent to 2,700.08.

In currencies, the dollar rose to 81.85 yen from 82.04 yen late Monday. The euro gained to $1.3708 from $1.3689.

Benchmark crude for March delivery was down 38 cents at $91.81 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $2.85, or 3.2 percent, to settle at $92.19 on Monday.

Oil prices have risen sharply since anti-government rioting began in Egypt at the end of last week. The country is not a major producer of oil, but it plays a key role in the industry because it controls the Suez Canal, a major route for oil tankers and cargo ships.

[Associated Press; By PAMELA SAMPSON]

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