World markets up again amid ongoing optimism

By PAN PYLAS

LONDON

World stock markets rose Wednesday as investor appetite for riskier assets such as shares and commodities remained strong, pushing many indexes up towards their highest levels this year.

Further solid earnings reports from companies including French bank Credit Agricole SA, encouraging economic data and dovish comments from central bank officials -- including Bank of England governor Mervyn King -- helped fuel another bout of buying in stock markets around the world.

In Europe, Germany's DAX closed up 55.15 points, or 1 percent, 5,668.35 while France's CAC-40 was 28.80 points, or 0.8 percent, higher at 3,814.39. And Britain's FTSE 100 index of leading British shares rose 36.20 points, or 0.7 percent, to close at 5,266.75, just shy of its best finish this year.

On Wall Street, the Dow Jones industrial average was up 27.66 points, or 0.3 percent, at 10,274.63 around midday New York time while the broader Standard & Poor's 500 index rose 3.21 points, or 0.3 percent, at 1,096.22. Trading levels in the U.S. are expected to be light through the session as government debt markets are closed for the Veterans Day holiday.

Stocks around the world have enjoyed a strong first half to the week after finance ministers from the Group of 20 rich and developing countries indicated that borrowing costs would remain low for a while yet. As a result, the Dow Jones industrial average has struck new highs for 2009. A close above 1,100 would be the S&P's first since October 2008.

"Investors remain keen to look beyond the negatives and keep their appetite for optimism -- and risk -- strong," said chief market strategist at IG Index.

Analysts said much of the interest over the remainder of the week will be earnings reports from a host of U.S. retailers, including Wal-Mart Stores Inc., Abercrombie & Fitch Co. and JC Penney Inc. Without the help of consumer spending, which accounts for around for 70 percent of the U.S. economy, any global economic recovery will be modest.

Macy's Inc. kicked off the retailers' results season earlier. Though it revealed that its third-quarter loss shrunk amid tight inventory controls and a move to localize merchandise at its department stores by region, its share price fell modestly after it revised up its full-year profit guidance by less than many in the markets had hoped.

Most interest Wednesday centered on Britain, where figures showed the number of people with jobs increased in the three months to September for the first rise since May 2008. Unemployment still rose, however, because of an increase in the size of the available work force as university graduates joined the labor market.

"These data finally provide evidence that the UK is emerging from the gloom, albeit several months after Germany and France," said Jane Foley, research director at Forex.com.

The latest quarterly economic projections from the Bank of England did little to alter the underlying stock market sentiment. Though the central bank raised its growth forecasts, it did not alter the prevailing view that interest rates in Britain will remain at very low levels for a while to come.

Governor Mervyn King indicated that the Bank of England was not closing the door on a further injection of money into the British economy and said a drop in the currency would help support Britain's export-led recovery. A lower pound would make British exports cheaper. Following his comment, the pound fell from a high of $1.6770 to $1.6640.

Meanwhile, the euro was on the retreat against the dollar after its latest attempt to push up above 15-month highs faltered. By late afternoon London time, the euro was 0.1 percent down at $1.4971.

Analysts reckon another attempt at the $1.5061 level is likely soon even though U.S. Treasury Timothy Geithner backed a "strong dollar" policy once again.

Hans Redeker, global head of foreign exchange research at BNP Paribas, said Geithner's comments gain "little credibility at a time when the U.S. administration is thinking of putting an additional fiscal package in place in order to stabilize the labour market."

Earlier in Asia, Japan's Nikkei stock average was higher in the morning before closing virtually unchanged at 9,871.68 while Hong Kong's Hang Seng rose 1.6 percent to 22,627.21.

Elsewhere, South Korea's market added 0.8 percent, with markets in Australia, Taiwan and Singapore also gaining.

China's Shanghai index fell after eight days of gains, losing 0.1 percent to 3,175.19 despite figures showing that the slump in exports was easing.

Oil prices rose modestly back towards $80 a barrel. Benchmark crude for December delivery was up 17 cents at $79.22 a barrel. The contract fell 38 cents to settle at $79.05 on Tuesday.