China figures shore up markets
LONDON (AP) — Mounting hopes over China's economy combined Friday with signs that the U.S. recovery is gaining traction to shore up markets, particularly in Asia.
Following a lackluster start to the week, investors have since been cheered by the signals showing the two world's largest economies have started 2013 in relatively rude health. Many stock indexes around the world, including the Dow, are trading are multiyear highs amid optimism over the world economy and hopes that Europe's debt crisis is slowly coming under control.
On Thursday, figures showing weekly U.S. jobless claims down at a five-year low and a strong rebound in housing starts reignited the new year rally.
That buoyant backdrop carried through into the Asian session Friday and was accentuated by figures showing China's economy, the world's number 2, grew 7.9 percent in the fourth quarter of 2012, up from the previous quarter's 7.4 percent and just ahead of predictions for a 7.8 percent rise. Industrial production and retail sales figures also came in better than expected.
In Europe, the FTSE 100 index of leading British shares was up 0.6 percent at 6,186 while the CAC-40 in France rose 0.2 percent to 3,752. Germany's DAX was 0.2 percent lower at 7,720.
In the U.S., the Dow Jones industrial average was flat at 13,600 while the broader S&P 500 index fell 0.1 percent to 1,470. Both indexes closed Thursday at their highest levels in five years.
"The new year rally continues unabated," said Rebecca O'Keeffe, head of investment at Interactive Investor. "Today it is being sustained by positive news from China."
Any broad impact emerging from positive earnings from Morgan Stanley and General Electric was offset by a softer than anticipated consumer confidence survey from the University of Michigan.
Earlier in Asia, Japan's Nikkei 225 soared 2.9 percent to close at 10.913.30, the highest finish in nearly three years, as the yen slipped against the dollar.
For a while, the dollar was trading above the 90-yen line for the first time since June 2010 as expectations intensified that the Bank of Japan will take steps to ease credit next week. A weaker yen is a significant boost for Japan's powerhouse exporters. By midafternoon London time, the dollar was flat at 89.84 yen.
Hong Kong's Hang Seng rose 1.1 percent to 23,601.78 and South Korea's Kospi added 0.7 percent to 1,987.85. In mainland China, the Shanghai Composite Index rose 1.4 percent to 2,317.07 while the smaller Shenzhen Composite Index gained 1.5 percent to 935.7
Oil prices were fairly subdued following recent strong gains, with the benchmark New York rate up 3 cents at $95.52 a barrel. On Thursday, the contract gained $1.25 to finish at $95.49 a barrel, its highest close since last September.
Elsewhere, the euro, which has had a strong start to the year amid hopes that Europe's debt crisis has calmed for the time being, was down 0.5 percent on the day at $1.3309.
Pamela Sampson in Bangkok contributed to this report.