European, Asian markets rebound despite US losses

[November 21, 2008]  LONDON (AP) -- European and Asian stock markets rebounded Friday as expectations of a recovery on Wall Street prompted investors to scoop up battered financial and energy shares.

The FTSE 100 index of leading British shares was up 42.78 points, or 1.1 percent, at 3,917.77, while Germany's DAX was 46.59 points, or 1.1 percent, higher at 4,266.79. The CAC-40 in France was up 34.62 points, or 1.2 percent, at 3,015.04.

The modest bounceback in Europe came after Asian markets recouped early losses in the wake of the sell-off on Wall Street to end up in positive territory. Japan's Nikkei 225 stock average rose 207.75, or 2.7 percent, to 7,910.79, and Hong Kong's Hang Seng index jumped 360.64 points, or 2.9 percent, to 12,763.81.

Worries about the future of both the U.S. car industry and Citigroup Inc., as well as the fall in the price of oil to three-year lows below $50 a barrel fueled the selling on Wall Street Thursday. The Dow Jones index of leading U.S. shares suffered its worst two-day percentage decline -- 10.6 percent -- since October 1987's stock market crash, while the broader Standard & Poor's 500 index slumped to its lowest level in 11 years.

However, U.S. stock index futures were sharply higher as investors look to buy up heavily beaten stocks. Dow futures were up 303 points, or 4 percent, at 7,787 while S&P futures were up 31.9 points, or 4.3 percent, at 780.2.

"The only saving grace is that the cherry pickers may now come in and start buying up some keenly priced stock," said Matt Buckland, a dealer at CMC Markets.

Financial stocks in Europe, such as BNP Paribas SA, HSBC PLC and UBS AG, have led the way in Europe Friday, though heavyweight energy stocks in London, like BP PLC and Royal Dutch Shell have recovered strongly as oil prices pushed back up above $50 a barrel.

With a dearth of economic news on Friday, stock markets in Europe and the U.S. will be keeping a close eye at developments at Citigroup, which saw its shares tumble Thursday to their lowest level in more than 15 years, below $5 a share, despite a Saudi prince's decision to boost his stake in the bank.

Prince Alwaleed bin Talal, a longtime investor in Citigroup, said he plans to increase his stake in the bank to 5 percent from less than 4 percent. He also expressed "his full and complete support" of the bank's management -- including Vikram Pandit, who has been CEO for less than a year.

Citigroup is widely considered the most vulnerable among the major U.S. banks, failing to turn a profit in the past four quarters when rivals such as JPMorgan Chase & Co. and Bank of America Corp. managed to do so.

"Today will likely be another fluid day with rumors driving the market," said Hans Redeker, an analyst at BNP Paribas.

Earlier, in Asia, South Korea's Kospi surged 5.8 percent and Australia's market closed up 1.9 percent after initially falling more than 3 percent. But mainland China's Shanghai Composite index slipped 0.7 percent and markets in the Philippines and Indonesia also sank.

Financial, real estate and technology stocks led the recovery in Asia, particularly in Hong Kong, where HSBC Holdings PCL jumped 4.5 percent, China Construction Bank Corp. rose 6.7 percent and Standard Chartered Bank increased 4.5 percent.

"There's a little bit of strength coming back into beaten-down stocks," said Andrew Yates, vice president of foreign institutional sales at Asia Plus Securities in Bangkok. "But the volumes are not great so it's difficult to call a bottom particularly with the macro picture being so weak."

Oil prices, which have fallen to a third of their July peak, edged up in London trading. Light, sweet oil for January delivery rose 85 cents to $50.27 a barrel on the New York Mercantile Exchange after earlier falling as low as $48.25, the lowest since May 2005.

In currencies, the dollar rose 1.8 percent to 95.29 yen while the euro was up 1.3 percent at $1.2597.

[Associated Press; By PAN PYLAS]

AP Business Writer Stephen Wright in Bangkok contributed to this report.

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