World stocks gain amid upbeat Japan, India reports

[May 29, 2009]  HONG KONG (AP) -- Asian stocks climbed Friday as Japanese industrial production jumped at its fastest pace in 56 years and India's economic slowdown eased, reassuring many investors about a global recovery. European stocks opened higher.

Asian trading was tepid early in the day but improved as the region's latest economic news helped investors stow their doubts, at least for now, about the sustainability of this spring's aggressive run in equities markets. Resource producers were among the session's best performers as oil prices hit a fresh six-month high above $65.

In Japan, industrial output jumped 5.2 percent in April, the government said, as companies raised production following drastic cutbacks because of the unprecedented drop in demand late last year.

It was evidence that manufacturers in the world's second-largest economy are starting to heal amid the country's steepest recession since World War II, and helped offset other reports that pointed to continuing pain for Japan's workers and consumers.

Also buoying expectations of a turnaround were figures in India showing the slowdown in Asia's third-largest economy had unexpectedly eased in the first quarter.

Still, after months of large gains, investors have shown less conviction in recent days. In the near term, analysts say, the markets could be directionless as the massive liquidity brought on by stimulus spending and rock-bottom interest rates around the world is offset by a hesitancy among many investors to buy more stocks.

"We've had such a good run and stocks don't look cheap at this point anymore," said Andrew Orchard, Asian strategist for Royal Bank of Scotland in Hong Kong. "But I think the liquidity is so strong that any bit of good news can get blown out of proportion and support prices right now."

As in Asia, trade in Europe turned higher with benchmarks in Britain, Germany and France gaining a little over 1 percent. Wall Street futures rebounded, suggesting a higher open in the U.S. Friday. Dow futures rose 26, or 0.3 percent, to 8,410 and S&P futures gained 3.6, or 0.4 percent, to 908.70.

Japan's Nikkei 225 stock average gained 71.11 points, or 0.8 percent, to 9,522.50 while Hong Kong's Hang Seng added 285.73, or 1.6 percent, to 18,171.00.

South Korea's Kospi was up 0.3 percent, and Australia's key index climbed 1.7 percent. Financial markets in mainland China and Taiwan were closed Friday for a holiday.

India's Sensex advanced 2.8 percent to 14,701.98 as news of the country's economic growth surprised investors.

Asia's third-biggest economy grew 5.8 percent from a year earlier in the first three months of 2009 as an expansion in construction, financial services and agriculture offset a slide in manufacturing. The pace, equal to the prior quarter's, was much better than many economists had expected.

Across the region investors bought commodity stocks as crude prices pushed higher, with China's offshore oil produder CNOOC up 4.2 percent in Hong Kong and Japan's Inpex gaining 6.3 percent.

Oil extended gains above $65 a barrel Friday in Asia to reach a fresh six-month high after the U.S. reported a fall oil inventories and signs of economic improvement. Benchmark crude for July delivery was up 69 cents to $65.78 a barrel, adding to its $1.63 rise overnight.

In New York Friday, the Dow rose 103.78, or 1.3 percent, to 8,403.80. The S&P 500 index rose 13.77, or 1.5 percent, to 906.83.

The dollar fell to 96.16 yen from 96.76 yen. The euro was higher at $1.4030 from $1.3939.

[Associated Press; By JEREMIAH MARQUEZ]

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