World stocks mostly higher despite myriad of woes

[March 24, 2011]  BANGKOK (AP) -- World stocks were on the upswing Thursday despite serious challenges to the global economy, including Japan's struggle to contain an earthquake-spawned nuclear crisis, Portugal's unresolved financial problems and uprisings in the Middle East.

Crude prices rose above $106 a barrel after closing the previous day at a two-year high, with traders on edge amid an unprecedented wave of anti-government protests in the oil-rich Arab world. In currencies, the dollar was up against the yen and the euro.

Shares headed up in early European trading. Britain's FTSE 100 was 0.3 percent higher to 5,811.67 and Germany's DAX gained 0.3 percent to 6,826.52. France's CAC-40 was up 0.2 percent to 3,923.90.

Wall Street was headed for a higher opening, with Dow Jones industrial futures up 0.1 percent to 12,030 and S&P 500 futures rising slightly to 1,292.80.

Among Asian benchmarks closing higher were Hong Kong's Hang Seng, up 0.4 percent to 22,915.28, and South Korea's Kospi, which added 1.2 percent to 2,036.78. Shares in Taiwan, Singapore, and New Zealand also posted gains.

Australia's S&P/ASX 200 index rose 1 percent to 4,699.60, with mining shares rising on expectations of robust demand for metals from emerging markets -- and from Japan, once rebuilding of its quake-devastated northeastern coast starts. BHP Billiton Ltd. was up 1.2 percent and Rio Tinto Ltd. gained 1.1 percent.

Mainland Chinese shares were slightly down amid concerns that the People's Bank of China would continue to tighten monetary policy in order to fight inflation. The Shanghai Composite Index lost 0.1 percent to 2,946.71 and the smaller Shenzhen Composite Index lost less than 1 point to 1,299.53.

"The market expects the central bank to use more tools such as open market operations and raising the bank reserve rate to continue to tighten monetary policy," said Peng Yunliang, a Shanghai-based analyst. "We believe the market will rebound in the short-term, but it may not be much higher."

The Nikkei 225 slipped 0.2 percent to close at 9,435.01, a day after Japan's government put the damage estimate from the March 11 earthquake and tsunami at $309 billion. It now ranks as the most expensive natural disaster on record.

Still, investors pushed construction-linked shares higher, expecting those companies to benefit once Japan begins rebuilding. Komatsu Ltd. rose 1.4 percent after it announced that production was resuming in affected areas. Taiheiyo Cement Corp. jumped 5.2 percent. Nishimatsu Construction Co. Ltd. was 1.4 percent higher.

Simon Wong, a regional economist at Standard Chartered Bank in Hong Kong, said sentiment in Asia was rising as some Japanese factories hobbled by the country's earthquake were resuming production.

"Part of Japanese industry is resuming operations -- that is a clearly good news for the region as a whole. Across Asia, there has been a fear that the stoppage in Japanese factories may lead to a disruption in the regional supply chain," Wong said.

The disaster killed more than 18,000 people, caused extensive damage to roads, utilities and businesses and wracked the Fukushimi Dai-ichi nuclear plant, which has leaked radiation since the tsunami engulfed its crucial cooling systems.

While a complete nuclear meltdown was avoided, a myriad of factors weighed on sentiment: the impact on Japanese companies from rolling electricity blackouts, the possibility of aftershocks, anxiety over elevated levels of radioactive iodine in Tokyo's tap water, and import bans on Japanese food from the region affected by radiation.

Japan's iconic auto industry was hammered by the disaster, since the quake struck the industrial northeast -- a major center for auto parts production.

Toyota Motor Corp., the world's largest automaker, plans to restart production of the Prius and two Lexus hybrids on Monday. Of the company's nine other factories in Japan, Toyota has only said shutdowns will last at least until Saturday. It will have lost production of about 140,000 vehicles by then. Its shares slumped 2.7 percent.

Separately, rival Honda Motor Co. said the suspension of car production at its Saitama and Suzuka factories will be extended to April 3. It is restarting production of motorcycles at its Kumamoto factory on Monday. Honda shares were down 2.6 percent, and Nissan Motor Corp. slid 4.6 percent.

Elsewhere, Europe's debt crisis showed signs of flaring anew. Portugal's prime minister quit on Wednesday after opposition parties overwhelmingly rejected his last-ditch round of austerity measures aimed at preventing the eurozone's weakest economy from plunging into chaos.

On Wall Street, indexes had been lower early Wednesday but rallied after an Energy Department report showed that gasoline consumption continued to grow despite sharp price increases at the pump -- possibly a positive sign, since gasoline usage translates into consumer activity that is vital for the country's economic recovery.

The Dow Jones industrial average rose 0.6 percent to 12,086. The S&P 500 index edged up 0.3 percent to close at 1,298, and the Nasdaq rose 0.5 percent to 2,698.

Benchmark crude for May delivery was up 29 cents at $106.04 a barrel in electronic trading on the New York Mercantile Exchange. The contract added 78 cents to settle at $105.75 on Wednesday, the highest close since Sept. 26, 2008.

Oil has jumped 24 percent since Feb. 14 as violent protests rock the Middle East and North Africa and traders worry about possible crude supply disruptions. In Libya, fighting between rebels and government forces has halted most of the country's 1.6 million barrels a day of crude production.

Investors expect that the international military intervention launched to halt Libya's leader crackdown will likely prolong the shutdown of oil output from the OPEC nation.

In currencies, the euro was down to $1.4101 from $1.4123 late Wednesday. The dollar rose to 80.91 yen from 80.86 yen.

[Associated Press; By PAMELA SAMPSON]

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