World markets higher despite China inflation jump

[June 14, 2011]  BANGKOK (AP) -- A round of confidence-building corporate deals in the U.S. helped lift world stock markets Tuesday, despite China's inflation rate jumping to a near three-year high.

Oil prices hovered around $97 a barrel. The dollar was lower against the euro and up slightly against the yen.

European shares were higher in early trading, building on momentum from Asia. Britain's FTSE 100 rose 0.6 percent to 5,807.58. Germany's DAX jumped 1.5 percent to 7,193.57 and France's CAC-40 added 1 percent to 3,845.75.

Wall Street was set for further gains, with Dow Jones industrial futures 85 points higher to 11,970 and S&P 500 futures more than 11 points higher to 1,277.70.

Japan's Nikkei 225 index rose 1.1 percent to close at 9,547.79. Tokyo Electric Power Co., the embattled Japanese utility known as TEPCO, soared 25.1 percent after announcing it had begun testing a new radioactive water treatment system at its troubled Fukushima Dai-ichi nuclear power plant. TEPCO has been struggling to get control of a radiation leak at the plant since it was crippled by an earthquake and tsunami on March 11.

Shortly before market closed, Honda Motor Corp. announced that profit is expected to plunge 63.5 percent for the fiscal year ending March 2012 because of the earthquake and tsunami.

It said vehicle production in Japan is expected to be back at nearly normal levels by later this month. Production in regions outside of Japan is expected to be back up to pre-disaster levels in August or September. Honda shares closed up 0.7 percent.

South Korea's Kospi rose 1.4 percent to 2,076.83. Among the most active shares was Hynix Semiconductor, a world leader in memory chip production, gaining 1.1 percent. Samsung Electronics, the top global manufacturer of flat screen televisions, memory chips and liquid crystal displays, rose 1.2 percent.

Australia's benchmark S&P/ASX 200 gained 0.5 percent to 4,586.50. Benchmarks in Taiwan, New Zealand and Indonesia were higher, while those in the Philippines and Singapore slipped. Hong Kong's Hang Seng fell less than 0.1 percent to 22,496.

Mainland Chinese shares advanced after the government announced that inflation in May was 5.5 percent, the highest in almost three years but not as high as some forecasts had suggested.

The benchmark Shanghai Composite Index gained 1.1 percent to 2,730.04, while the Shenzhen Composite Index of China gained 1.6 percent to 1,128.42.

China's central bank announced a 0.5 percentage point increase in the reserves banks are required to hold, to a record 21.5 percent of deposits, as it attempts to contain inflation.

On Wall Street on Monday, a round of corporate deals spurred confidence and helped eke out a day of gains.

Wendy's/Arby's Group Inc. rose nearly 1 percent after the company said it would sell control of its Arby's restaurant business to a private equity firm that owns several other quick-service franchises, including Moe's Southwest Grill and Auntie Anne's. And clothing maker VF Corp., whose brands include Wrangler and The North Face, jumped 10 percent after agreeing to buy the boot maker Timberland for more than $2.2 billion.

The Dow Jones industrial average gained less than 0.1 percent to close at 11,952.97. The Standard and Poor's 500 inched up less than 0.1 percent to 1,271.83. The Nasdaq composite lost 0.2 percent to 2,639.69

Benchmark crude for July delivery was up 19 cents to $97.49 in electronic trading on the New York Mercantile Exchange. The contract dropped $1.99 to settle at $97.30 on Monday.

In currencies, the euro rose to $1.4454 from $1.4412 late Monday in New York. The dollar strengthened to 80.23 yen from 80.19 yen.

[Associated Press; By PAMELA SAMPSON]

AP researcher Fu Ting contributed to this report from Shanghai.

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