World stocks up as Greece clears bailout hurdle

[July 01, 2011]  SHANGHAI (AP) -- World markets posted muted gains Friday, with Tokyo rising to an eight-week high, as investors took heart from debt-strapped Greece's approval of harsh austerity measures but remained wary following signs of slowing growth in China.

Oil prices dipped below $95 per barrel after China reported manufacturing rose at the slowest pace in over two years in June, while the dollar strengthened against the euro and the yen.

In early European trading, Britain's FTSE 100 rose 0.2 percent to 5,958.07. Germany's DAX was down 0.1 percent at 7,39.08, and France's CAC 40 lost 0.3 percent at 3,971.42. U.S. futures pointed to a higher opening on Wall Street. Dow Jones industrial futures rose 0.2 percent to 12,364, while S&P 500 futures were unchanged at 1,315.50.

Japan's Nikkei 225 index rose 0.5 percent to 9,868.07, its highest close since May 11, after the Bank of Japan's quarterly survey of business sentiment forecast an improvement in the outlook for large manufacturers in the coming quarter, raising the likelihood for recovery in world's No. 3 economy.

A March 11 earthquake and tsunami devastated Japan's economy, wiping out wide swaths of the northeast coast, damaging factories and creating a nuclear-plant emergency that Japan is still struggling to resolve.

Mainland Chinese shares were mixed after a report showed a further slowing in manufacturing in June. The news suggesting the economy is cooling alleviated concern over fresh monetary tightening measures to combat inflation that has dampened market sentiment for months.

The benchmark Shanghai Composite Index saw profit-taking erase earlier gains, edging 0.1 percent lower to 2,759.36, while the Shenzhen Composite Index added 0.5 percent to 1,162.07.

The burst of optimism over the manufacturing data was short-lived, however, with many in the market still convinced an interest rate is imminent.

"There must be an interest rate hike in July," said Liu Kan, an analyst in Guoyuan Securities, based in Shanghai.

PetroChina, the country's biggest oil and gas company and Shanghai's most heavily weighted share, lost 0.6 percent while Agricultural Bank of China Limited slid 2.1 percent.

Most other markets in the region gained, with South Korea's Kospi index climbing 1.2 percent to 2,125.74. Benchmark indexes in Singapore, Taiwan, New Zealand and Indonesia were also higher.

Australia's S&P ASX 200 lost 0.4 percent to 4,591.20 as investors took the Chinese manufacturing report as a cue to sell commodities shares.

Markets in Hong Kong were closed for a public holiday.

The regional gains came after Greek lawmakers passed a cost-cutting bill that had to be approved before international lenders would release $17 billion in rescue funds. Greece needs the money to avoid a default on its debt that could disrupt financial markets and bring on a wider European crisis.

On Wall Street, traders were also reassured by the encouraging report by a trade group that manufacturing in Chicago quickened unexpectedly in June. Analysts had forecast a decline.

The Dow rose 1.3 percent to 12,414.34. The S&P 500 added 1 percent to 1,320.64. The Nasdaq composite gained 1.2 percent to 2,773.52.

Benchmark crude for August delivery dropped 88 cents to $94.54 on the New York Mercantile Exchange. The contract settled at $95.42 per barrel Thursday on the Nymex.

In currencies, the euro dipped to $1.4510 from $1.4521 late Thursday in New York. The dollar strengthened to 80.72 yen from 80.58 yen.

[Associated Press; By ELAINE KURTENBACH]

AP researcher Fu Ting contributed to this report.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.