World stocks higher amid signs of Japan recovery

[May 18, 2011]  BANGKOK (AP) -- World stocks climbed Wednesday, shrugging off weak U.S. economic indicators as Asia got a boost from signs that Japan's post-tsunami recovery is quickening.

Oil prices rose to near $99 a barrel as the dollar slipped against the euro and the yen. European shares were higher in early trading. Britain's FTSE 100 was up 0.9 percent at 5,915.93 and Germany's DAX rose 0.9 percent to 7,324.07. France's CAC-40 added 1 percent to 3,979.45.

Wall Street was also poised for a higher opening, with Dow Jones industrial futures 42 points higher to 12,479 and S&P futures up 4.3 points to 1,329.70.

Japan's Nikkei 225 index rose 1 percent to close at 9,662.08, helped by reports of a recovery in factory production after massive disruptions following the March 11 earthquake and tsunami that wiped out much of the country's industrialized northeast.

Bank of America Merrill Lynch said a survey of fund managers for May showed investors growing more confident in Japan's ability to rebound from the disasters.

In April's survey, respondents were divided evenly between those expecting the country's economy to weaken in the next year and those expecting it to strengthen. This month, a net 59 percent expected it to strengthen, the bank said.

Reports that Japan's Renesas Electronics Corp. -- a major provider of microprocessors that control brakes, engines and transmissions for cars -- will boost production at a key plant helped lift sentiment, Kyodo news agency reported, citing analysts. Renesas shares soared 5.8 percent.

South Korea's Kospi climbed 1.6 percent to 2,135.78, with automakers and shipbuilders leading the way. Hyundai Heavy Industries Co., South Korea's leading shipbuilder, shot up 6.6 percent. Kia Motors Corp. jumped 3.7 percent.

Mainland China's Shanghai Composite Index rose 0.7 percent to 2,872.77 and the smaller Shenzhen Composite Index advanced 0.5 percent to 1,202.70. Huaneng Power International gained 1.3 percent amid reports the government might allow a slight increase in electricity rates for some regions hit by power shortages. Coal miner and power producer China Shenhua Energy added 0.9 percent.

Hong Kong's Hang Seng rose 0.5 percent to 23,011.14 and Australia's S&P/ASX 200 inched up 0.2 percent to 4,693.70.

Peter Elston, a strategist at Aberdeen Asset Management in Singapore, said Asian stock markets enjoyed a bounce that was nothing "beyond a slight technical reaction to recent weakness."

"There are so many issues out there causing a bit of market indigestion, that's really what's caused the weakness in markets in recent days," he said.

Rising oil prices sent crude and energy shares higher. CNOOC Ltd., China's main offshore oil and gas producer, bounced 1.5 percent higher. Shanghai-listed Shanxi Guoyang New Energy Co. Ltd. rose 2.9 percent.

Stock-buying continues despite repeated signals of economic distress from Europe, the U.S. and elsewhere.

Greece, Ireland and Portugal have needed bailouts from their neighbors because of their high debt loads, and investors worry that more will have to be done to rescue the Greek economy. The U.S., too, has a debt crisis. The world's No. 1 economy reached its $14.3 trillion limit on federal borrowing Monday, leaving Congress 11 weeks to raise the borrowing threshold or risk a financial panic or another recession.

Meanwhile, stubbornly high inflation in China and India has led their central banks to hike interest rates and take other measures to contain the problem, but with questionable success. Such measures are often unwelcome by investors, who regard them as antigrowth.

On Tuesday, the Federal Reserve said U.S. factories produced fewer goods in April for the first time in 10 months. If the decline continues, it could cut into the earnings of companies that make industrial equipment. The Commerce Department also reported that construction of new homes plunged.

The Dow lost 68.79 points to 12,479.58. The S&P 500 lost less than 1 point to 1,328.98. The Nasdaq rose less than 1 point to 2,783.21.

Benchmark crude for June delivery was up $1.69 to $98.60 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost 47 cents to settle at $96.91 per barrel on Tuesday.

In currencies, the euro strengthened to $1.4272 from $1.4229 in late trading Tuesday in New York. The dollar weakened to 81.06 yen from 81.43 yen.

[Associated Press; By PAMELA SAMPSON]

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