European markets jump as UK announces bailout plan

[January 19, 2009]  BANGKOK (AP) -- Most Asian stock markets rose modestly Monday as exporters got a boost from hopes a massive stimulus package will kick-start the U.S. economy but expectations of dire fourth quarter earnings kept a lid on gains. European bourses opened higher as Britain announced plans for a second bailout of banks.

With President-elect Barack Obama's inauguration on Tuesday, sentiment has been supported in recent days by hopes that the new U.S. administration will act boldly to revive the ailing American economy, a vital export market for Asia. An $825 billion stimulus package is making its way through the Congress.

Still, the optimism could quickly fade amid a litany of dismal earnings results, which could drag the Dow below 8,000 points, said Castor Pang, an analyst at Sun Hung Kai Financial in Hong Kong.

"Most investors fear the U.S. markets will continue to tumble. Once Obama's inauguration is out of the way, companies will release fourth quarter results and they are expected to be very poor," Pang said.

"The global economy is still continuing to slump," he said. "It would seem that there will be no sign of recovery in the first half of this year and that will keep sending markets south."

Major bourses in Europe jumped at the open on news the British government plans a second bailout for banks, including a scheme to insure them against losses, in hopes of spurring growth by boosting lending. Britain's FTSE 100 rose 2 percent, Germany's DAX gained 1.2 percent and France's CAC-40 was up 1.4 percent.

Japan's Nikkei 225 stock average edged up 26.70 points, or 0.3 percent, to 8,256.85, South Korea's Kospi gained 1.4 percent to 1,150.65 and Hong Kong's Hang Seng recovered early losses to rise 0.6 percent to 13,339.99.

Shanghai's benchmark rose 1.7 percent and markets in Australia and Singapore also gained. Thailand and Malaysia retreated.

Trade was muted in Asia ahead of the Martin Luther King Jr. national holiday in the U.S. on Monday. The Dow Jones industrials rose 68.73 points, or 0.8 percent, to 8,312 and the S&P500 gained 9.9 points, or 1.2 percent, to 858.50.

Futures suggested Wall Street would trade higher after the holiday. Dow futures rose 52 points, or 0.6 percent, to 8,295 and S&P500 futures gained 6.5 points, or 0.8 percent, to 855.10.

In Tokyo, major exporters also got a lift as the yen weakened mildly against the dollar. Japan's No. 1 automaker Toyota Motor Corp. was up 0.7 percent, Honda Motor Co. gained 4 percent and Panasonic Corp. rose 2.2 percent.

The dollar inched up as high as 91.29 yen before dipping back down to 90.67, unchanged from late Friday.

Toshiba Corp. jumped 6.5 percent amid reports it had won contracts to supply equipment for two nuclear plants being built in the U.S.

Technology stocks rose in Seoul on hopes the downturn in the sector has already passed its lowest point. Hynix Semiconductor vaulted 12.8 percent and LG Display jumped 7.9 percent.

In Singapore, SembCorp Marine Ltd., one of the world's biggest builders of deepsea oil rigs, sank 4.2 percent after Credit Suisse downgraded the stock to "underperform" as a major customer may default on payments for semisubmersible rigs it has ordered.

Oil prices continued to languish with light sweet crude for February delivery down 36 cents at $36.15 a barrel in electronic trading on the New York Mercantile exchange by early afternoon in Singapore.

[Associated Press; By STEPHEN WRIGHT]

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