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World markets surge on stimulus plans
2008-12-08
LONDON - European and Asian stock markets surged Monday ahead of expected further gains on Wall Street as investors took heart from new government plans to bolster growth around the world. The FTSE 100 index of leading British shares was up 190.83 points, or 4.7 percent, at 4,240.20, while Germany's DAX was 252.61 points, or 5.8 percent, higher at 4,634.08. The CAC-40 in France rose 191.53 points, or 6.4 percent, to 3,179.54. Futures indicated further gains on Wall Street, with Dow futures up 191 points, or 2.2 percent, at 8,803 and Standard & Poor's futures up 23.50 points, or 2.7 percent, at 895.90. Earlier, Hong Kong's Hang Seng index jumped 1,198.78 points, or 8.7 percent, to 15,044.87 -- its highest close in seven weeks -- while Japan's Nikkei 225 average jumped 411.54 points, or 5.2 percent, to 8,329.05. The gains came despite Friday's news that American employers cut 533,000 jobs in November -- the most in 34 years -- as investors appeared to signal their support for growth-promoting measures around the world. On Friday, the Dow Jones industrials rose 3.1 percent to 8,635.42, and the broader Standard & Poor's 500 index gained 3.7 percent to 876.07. "Equity markets are maintaining the rebound seen in Asia as markets respond positively to the latest rescue packages being announced globally," said Ian Stannard, an analyst at BNP Paribas. Positive sentiment was stoked by reports that China will this week look at new steps to expand the $586 billion of stimulus already planned and the announcement of additional spending plans in India after the central bank slashed its key interest rates by 1 percentage point. Developments in the U.S. were also encouraging investors and all eyes will be on whether Congress hammers out legislation that would dole out billions to Detroit's Big Three automakers. Investors also cheered President-elect Barack Obama's plans, announced over the weekend, for the largest U.S. public works spending program since the creation of the interstate highway system a half-century ago. "Equity investors are also hopeful that a federal support package for U.S. automakers is imminent and that Obama is fashioning a substantial package of fiscal reflation measures," said Stephen Lewis, an analyst at Monument Securities. Oil stocks were doing particularly well Monday as expectations of a big production cut from the OPEC oil cartel helped crude bounce back from four-year lows. Chakib Khelil, OPEC's president, said Saturday the oil cartel could announce a "severe" reduction of output quotas at its next meeting on Dec. 17 in Algeria. Though light, sweet crude for January delivery was up $2.51 to $43.32 a barrel Monday in electronic trading on the New York Mercantile Exchange, oil prices remain near four-year lows. On Friday, the contract fell Friday nearly $3 to settle at $40.81, having earlier fallen to a low of $40.50, levels last seen in December 2004. Elsewhere in Asia, Mumbai's Sensex index was up 4.6 percent, while in mainland China, the Shanghai Composite index rose 3.6 percent. Australia's benchmark index shot up more than 4 percent, led by banks and the nation's biggest retailers, as 8.7 billion Australian dollars of government handouts began to flow into the bank accounts of pensioners and low-income families. Thailand's key index advanced 2.8 percent, taking a cue from gains around the region and also lifted by signs the business-friendly opposition Democrat Party will have the numbers to form a coalition government in the aftermath of Thailand's ruling party being dissolved for vote buying. Markets in Singapore, Malaysia and Indonesia were closed for public holidays. The dollar was 0.4 percent higher at 93.24 yen while the euro was 1.0 percent firmer at $1.2854. __ Associated Press business writer Stephen Wright in Bangkok contributed to this report.
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