World Markets Rise As China Cooling Fears Ease
World stock markets rebounded Thursday as receding worries about credit-tightening in China bolstered companies across Asia and Australia’s economic recovery showed new momentum.
Benchmarks from Tokyo to Paris gained 0.5 percent or more while oil jumped above $80 a barrel after tumbling for several days this week.
Also galvanizing investors was modest gains Wednesday on Wall Street, where a Federal Reserve report provided optimism about the economy by noting that the recovery was spreading geographically even as new jobs remain scarce.
Asian markets tumbled the previous day amid jitters that China’s move to slow a torrent of bank lending could dent the pace of recovery in countries that are increasingly reliant on demand from the world’s No. 3 economy.
But with the initial knee-jerk reaction over, a more considered view emerged about the decision to hike the amount of deposits banks must keep in reserve.
For now, economists say, China’s planners are likely to confine tightening to technical tinkering to discourage excess lending. They are likely to wait some time before raising benchmark interest rates or cutting back on the government stimulus spending credited with helping revive domestic demand and creating jobs.
“Investors realized they were overreacting and tended to think the hike is necessary for the good of Chinese economy amid inflation expectations,” said Zhang Xiang, an analyst for Guodu Securities in Beijing.
As trading got started in Europe, stock benchmarks in France, Germany and Britain were each up 0.6 percent. Futures signaled a lackluster start to trading on Wall Street. S&P futures were up 1.2 points, or 0.1 percent, at 1,142.90.
Japan’s Nikkei 225 stock average led Asia’s gains, jumping 172.65, or 1.6 percent, to 10,907.68. That was despite news core machinery orders — a closely watched indicator of corporate capital spending — slumped to a record low in November as anemic domestic demand kept companies cautious.
South Korea’s Kospi added 0.9 percent to 1,685.77. Australia’s market rose 0.6 percent after new figures showed that the unemployment rate unexpectedly fell to 5.5 percent in December and thousands of new jobs were created.
Singapore’s benchmark was up 0.7 percent and India’s Sensex advanced 0.5 percent. Hong Kong’s Hang Seng gave up early gains to close down 31.65, or 0.2 percent, at 21,716.95. China’s Shanghai index rose 42.89 points, or 1.4 percent, to finish at 3,215.55.
In Tokyo trade, investors drove up stocks of commodities trading and metals companies as fears about China’s cooling measures dissipated. Trading house Mitsubishi Corp. jumped 4.4 percent and rival Mitsui & Co. Ltd. rose 4.3 percent.
It was also another frenzied day for money-losing Japan Airlines Corp.
More than 1 billion JAL shares were traded during the session — a new single-day record for an individual issue. JAL volume accounted for one-third of the 3.2 billion shares traded on the Tokyo Stock Exchange’s first section.
JAL rose 1 yen to 8 yen, after shedding nearly 90 percent of its value this week on expectations that the carrier will file for bankruptcy soon.
In the U.S. on Wednesday, the Dow rose 53.51, or 0.5 percent, to 10,680.77. The index traded above 10,700 for the first time since Oct. 3, 2008, rising as high as 10,709.26.
The broader Standard & Poor’s 500 index rose 9.46, or 0.8 percent, to 1,145.68, and the Nasdaq composite index rose 25.59, or 1.1 percent, to 2,307.90.
Oil prices climbed above $80 a barrel in Asia as rising stock markets ahead of fourth quarter earnings cheered crude traders. Benchmark crude for February delivery was up 56 cents to $80.21 in electronic trading on the New York Mercantile Exchange; the contract gave up $1.14 to settle at $79.65 on Wednesday.
In currencies, the dollar rose to 91.99 yen from 91.39 yen. The euro was steady at $1.4510.
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AP Researcher Bonnie Cao in Beijing and AP writer Tomoko A. Hosaka in Tokyo contributed to this report.
1/14/2010 4:59 AM STEPHEN WRIGHT, AP Business Writer BANGKOK