World stocks up, growth hopes offset Europe fears

[May 18, 2010]  SINGAPORE (AP) -- World stock markets were mostly higher Tuesday as investors tried to look past the turmoil in Europe to a growing global economy.

In early trading in Europe, the FTSE 100 index of leading British shares was up 41.53 points, or 0.8 percent, at 5,304.07 while Germany's DAX and the CAC-40 in France each rose 1.4 percent.

Earlier in Asia, the Shanghai Composite index jumped 1.4 percent to 2,594.78, bouncing back from losses earlier in the session. Hong Kong's Hang Seng index gained 1.2 percent to 19,944.94 while Seoul's Kospi slipped 0.5 percent to 1,643.24.

Japan's Nikkei 225 stock average rose 0.1 percent to 10,242.64, recovering slightly after shedding more than 2 percent the previous day. Benchmarks in Singapore, India and Thailand also advanced.

Some analysts expect inflation and interest rates to remain low and help fuel global economic growth. Capital Economics raised its 2010 economic growth forecast for Japan to 4.5 percent from 3 percent and its U.S. forecast to 3.5 percent from 3 percent.

Overnight in New York, the Dow Jones industrials rose 0.1 percent to 10,625.83 as investors spent the day tracking the euro's moves against the dollar. A drop and subsequent rebound in the euro steered the Dow from a loss of 184 points at midday to a gain of almost 6 by the close.

Investors are looking at the euro as an indicator of confidence in European economies. The 16-nation currency has been sliding on concerns that debt problems will undermine Europe's recovery.

A $1 trillion bailout package unveiled last week by the European Union and International Monetary Fund has failed to calm investor concerns that Europe has solved its debt and economic crisis.

"Doubts about the long-term survival of the euro are not going to go away," Capital Economics said in a report. "The support package may have averted a near-term sovereign debt crisis, but it is conditional on massive fiscal consolidation that may ultimately prove too much for the electorates of some member states in the euro-zone to bear."

In New York, the Standard & Poor's 500 index rose 0.1 percent Monday, while the Nasdaq composite index added 0.3 percent to 2,354.23.

In currencies, the dollar rose slightly to 92.78 yen from 92.61 yen late Monday. The euro stood at $1.2396 from $1.2392.

Benchmark crude for June delivery was up $1.31 to $71.39 a barrel in electronic trading on the New York Mercantile Exchange. The June contract dropped $1.53, or 2.1 percent, to $70.08, a three-month low.

[Associated Press; By ALEX KENNEDY]

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