European, US markets climb on strong retail sales data, improvement in China’s exports

By Louise Watt, AP
Friday, December 11, 2009

European, US markets climb after retail sales data

LONDON — European and U.S. markets rose modestly Friday after retail sales data showed American consumers are picking up their spending — a key ingredient for economic recovery ahead of the holiday season.

European indexes had earlier risen strongly after Asian stocks strengthened on a big improvement in China’s exports that pointed to rising global demand that could lift other trade-reliant economies.

Britain’s FTSE 100 closed 0.3 percent higher at 5,261.57, Germany’s DAX added 0.8 percent to 5,756.29 and France’s CAC 40 gained 0.1 percent to 3,803.72.

In midday trading in New York, the Dow Jones industrial average index advanced 0.2 percent to 10,430.01 and the Standard & Poor’s 500 index grew 0.1 percent to 1,102.92. Earlier gains were trimmed as the dollar strengthened.

Benchmarks in Tokyo and Hong Kong led Asia’s gains.

Eagerly-awaited U.S. data showed retail sales in the world’s largest economy rose 1.3 percent in November, more than double the 0.6 percent increase economists had expected. Sales rose 1.4 percent in October.

The report boosted hopes that consumers are starting to feel more comfortable opening up their wallets after months of building up their savings.

A separate U.S. report showing an increase in consumer confidence signaled that spending could continue to rise. The preliminary Reuters-University of Michigan consumer sentiment index increased more than expected in December.

Also providing reassurance for investors was news that China’s November exports were down only 1.2 percent from a year earlier, the smallest decline this year, as nascent recoveries in the U.S. and other big markets helped revive demand. It was a dramatic improvement from October, when exports slid 13.8 percent, and even bigger declines in previous months.

Strong growth in Chinese industrial output and retail sales for the month also underlined that the recovery in the world’s third-biggest economy is gathering momentum.

European indexes were also helped by banking stocks, which continued to rise after snapping a three-day losing streak on Thursday and by mining stocks, which were boosted by rising metal prices and the upbeat Chinese data.

“This time of year always leads to expectations for a Santa rally, but with major stock markets up by at least 50 percent from their lows in March, maybe it is asking a bit much to expect another surge over the next few weeks,” said David Jones, chief market strategist at IG Index. “With volumes already starting to drop off, this week’s theme of lots of movement but no overall direction may be one we will have to get used to until the new year.”

In Asia, Japan’s Nikkei 225 stock average jumped 2.5 percent to 10,107.87. Exporting stocks like Toyota Motor Corp. and Sony Corp. benefited from a weaker yen, which makes their products more competitive overseas.

Hong Kong’s Hang Seng climbed 0.9 percent to 21,902.11 and South Korea’s Kospi rose 0.3 percent to 1,656.90.

Elsewhere, Australia’s benchmark gained 0.6 percent and Singapore’s market advanced 0.5 percent. China’s Shanghai index reversed early gains to close down 0.2 percent.

Heavy machinery stocks rallied after China’s industrial production figures spurred hopes of increased demand. Komatsu jumped 3.4 percent and Kubota Corp. finished up 3.3 percent. Panasonic Corp. surged 4.4 percent on the previous day’s announcement it had secured majority control of Sanyo Electric Co. in a $4.6 billion deal.

Oil prices fell in European trading. Benchmark crude for January delivery was down 69 cents to $69.85 in electronic trading on the New York Mercantile Exchange. On Thursday, the contract fell 13 cents to $70.54.


Associated Press Writers Stephen Wright in Bangkok and Tomoko A. Hosaka in Tokyo contributed to this report.

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