Solid economic data give world stocks a lift, as pound slips despite higher British growth

Solid data give stocks a lift as pound slips again

LONDON — World markets rose Friday after solid economic data helped shore up investor optimism, a day after concerns about Greece’s debt crisis and the U.S. recovery from recession weighed on sentiment.

In Europe, Britain’s FTSE 100 index was up 31.41 points, or 0.6 percent, at 5,309.63, while Germany’s DAX rose 29.92 points, or 0.5 percent, to 5,562.25. The CAC-40 in France was 30.15 points, or 0.9 percent, higher at 3,670.92.

Meanwhile, the pound continued to slide despite figures showing higher than expected British economic growth in the last three months of 2009, as investors fretted about the strength of the British economy and mounting speculation of a political impasse after the upcoming general election.

Earlier, most Asian markets advanced after figures showed that Japanese factory output, a key measure of economic health, rose by a better-than-expected 2.5 percent in January from the previous month. Shoppers were also in a better mood last month compared to a year earlier, sending retail sales surging 2.6 percent, the most in about 1 1/2 years.

Further good news emerged with the announcement from the Commerce Department that the economy grew at an annualized rate of 5.9 percent in the last three months of 2009, 0.2 percentage points more than initially thought.

The upward revision was unexpected — the consensus in the markets was for no change from the first estimate — and may ease some of the concerns that have built up this week over the pace of the U.S. economic recovery.

Some of the data has been truly woeful the last few days, though many analysts concede that the bad weather on the Atlantic Seaboard may be to blame.

There’s more data to come — some of it more timely than the GDP figures — so investors aren’t getting too excited.

Ahead of the open, Dow futures were up 1 point at 10,317 while the broader Standard & Poor’s 500 futures rose 1.1 point to 1,103.40.

Many analysts think that stocks will continue to find support in the current environment as the world’s leading central banks are not expected to raise interest rates any time soon — U.S. Federal Reserve chairman Ben Bernanke, for example, repeated this week that U.S. borrowing costs need to stay at record low levels for “an extended period.”

Ben Potter, research analyst at IG Markets, said that with interest rates low around the world and “upbeat data out of Asia, the withdrawal from equities has been half hearted at best.”

The pound remained in focus, a day after Jim Rogers, the former business partner of George Soros, said it was a “basket case.”

Revised figures showing that the British economy grew by 0.3 percent in the fourth quarter against the previous estimate of 0.1 percent — gave the pound no lasting bounce, and it traded at a nine-month low of $1.5167, down 0.6 percent on the day. Investors worried that most of the upward revision was due to government spending, which will more than likely start being removed after the election.

“These data highlight the ongoing argument over the risk of a double dip recession if too much austerity is introduced after the general election and the opposing view that a potential funding crisis could result if no austerity is announced,” said Jane Foley, research director at Forex.com.

With opinion polls showing a narrowing of the Conservative Party lead over the governing Labour Party, there is speculation that the election, which must be held by early June, will not give any one party a majority in Parliament.

Weak coalition governments in such countries as Belgium and Italy are “associated with the build up of a public debt as such governments can lack the necessary support for structural-budgetary reform,” said Foley.

The euro was up 0.2 percent at $1.3573 while the dollar rose 0.1 percent to 89.22.

Earlier in Asia, Japan’ Nikkei 225 stock average rose 24.07 points, or 0.2 percent, to 10,126.03 and Hong Kong’s Hang Seng added 209.13, or 1 percent, to 20,608.70. Elsewhere, South Korea’s market rose 0.5 percent and Australian shares gained 1 percent.

In India, Mumbai’s Sensex jumped almost 2 percent as the country’s finance minister, presenting a new budget, said the government’s top priority was to “quickly revert to high growth of 9 percent, and then find the means to cross the double digit growth barrier.”

Chinese shares fell, with Shanghai’s index off 0.3 percent, amid uncertainty about the direction of government policy ahead of the national legislature’s annual meeting next week.

Oil prices rose modestly with benchmark crude for April delivery up 9 cents at $78.26.

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AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.