World stocks buoyant ahead of US retail sales data

[November 16, 2009]  LONDON (AP) -- World stock markets advanced Monday after figures confirmed that Japan, the world's second biggest economy, was growing strongly and ahead of key U.S. retail sales data.

European stocks tracked their Asian counterparts higher, with the FTSE 100 index of leading British shares up 62.60 points, or 1.2 percent, at 5,365.98. Germany's DAX rose 61.11 points, or 1.1 percent, to 5,747.94 while the CAC-40 in France was 36.41 points, or 1 percent, higher at 3,842.42.

The rally was set to continue on Wall Street -- Dow futures were up 65 points, or 0.6 percent, at 10,307 while the broader Standard & Poor's 500 futures rose 8.8 points, or 0.8 percent, to 1,100.20.

Most attention later will center on U.S. retail sales figures for October -- analysts expect the headline number, which includes auto sales, to have rebounded by 0.9 percent during the month following September's 1.5 percent decline.

Retail sales are particularly important when assessing the outlook for the global economy -- without the help of U.S. consumer spending, which accounts for around 70 percent of the U.S. economy, any global economic recovery will be modest.

Ben Potter, research analyst at IG Markets in Melbourne, Australia, said a smaller than anticipated rebound could heap pressure on Wall Street, particularly on the S&P 500, which has failed to sustain a break above the 1,100 mark -- many investors think that a close above 1,100 for the S&P 500 could act as a catalyst for further gains around the world.

"Although the S&P's break above 1,100 is increasingly being portrayed as having the potential to determine that this is no bear market rally, anything that suggests consumer confidence is taking a hit as we approach the holiday shopping season could initiate a wave of profit taking in the U.S. -- the impact of which would doubtless be felt on markets across the globe," said Potter.

The retail sales data later come in the wake of a raft of encouraging quarterly reports Friday from large U.S. retail chains, including teen clothing retailer Abercrombie & Fitch Co. and department-store chain J.C. Penney Co.

Retailers will continue to dominate the earnings calendar in the U.S. this week too. Those expected to report include Home Depot Inc., Target Corp. and Gap Inc.

Stocks have rallied strongly since March's lows with many of the world's major indexes trading at, or near, their highest levels this year as investors reined in their economic doomsday expectations to factor in a swifter than anticipated global economic rebound.

Earlier, Japan's Nikkei 225 stock average closed up 20.87 points, or 0.2 percent, to 9,791.18 after figures showed the Japanese economy expanded at an annual rate of 4.8 percent in the third quarter. That was the second straight quarter of expansion and the biggest rise since 2007.

Encouragingly, much of the growth in Japan was due to a rise in consumer spending as opposed to exports.

"Growth will inevitably slow in Q4 and beyond, but we expect Japan to continue to surprise the markets on the upside for a few quarters yet," said Julian Jessop, international economist at Capital Economics.

In greater China, Hong Kong's Hang Seng rose 390.35 points, or 1.7 percent, to 22,943.98, and Shanghai's benchmark surged 87.40 points, or 2.7 percent, to 3,275.05.

Markets in South Korea, Taiwan, Singapore and Australia rose between 1 percent and 2 percent.

Oil prices rose in tandem with stocks. Benchmark crude for December delivery was up 92 cents at $77.27 a barrel; the contract settled down 59 cents at $76.35 on Friday.

Meanwhile, the euro was up 0.2 percent at $1.4957 while the dollar was unchanged at 89.50 yen.

Gold prices gained $12.7 at $1,129.4 after touching a new high of $1,130.6.

[Associated Press; By PAN PYLAS]

AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.

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