US data buoys world markets; yen rally resumes

US data buoys world markets

LONDON — Stock markets in Europe and the U.S. spiked higher Thursday after better than expected U.S. jobs and trade data further eased concerns that the world’s largest economy was heading back towards recession.

In Europe, the FTSE 100 index of leading British shares closed up 64.42 points, or 1.2 percent, at 5,494.16 while Germany’s DAX rose 57.08 points, or 0.9 percent, to 6,221.52. The CAC-40 in France ended 44.94 points, or 1.2 percent, higher at 3,722.15.

On Wall Street, the Dow Jones industrial average was up 73.33 points, or 0.7 percent, at 10,460.34 around midday New York time, while the broader Standard & Poor’s 500 index rose 10.51 points, or 1 percent, to 1,108.38.

Wall Street’s performance was better than had been anticipated in the futures markets before the upbeat economic news, and helped European shares extend their gains.

The U.S. government reported that initial U.S. jobless claims fell by more than anticipated last week to a two-month low of 451,000 from the previous week’s 478,000 — the consensus in the markets was for claims to total 470,000.

The simultaneous release of a bigger than anticipated 14 percent narrowing in the U.S. trade deficit for July to $42.8 billion shored up confidence in the markets further.

“With signals that the U.S. economy might not be in quite the state as some had thought, the bulls may start to wade back in,” said Will Hedden, sales trader at IG Index.

Earlier, sentiment in the markets had continued to be supported by waning fears over an escalation in Europe’s debt crisis following a successful Portuguese bond auction — on Tuesday, investors had been spooked by a Wall Street Journal report suggesting that this summer’s stress tests into 91 EU banks understated some lenders’ holdings of potentially risky government debt.

In the currency markets, the main point of interest remains the value of the yen, which hit another 15-year high against the dollar Wednesday.

The dollar’s drop to 83.35 yen has reignited talk that Japan’s monetary authorities will intervene to stem the export-sapping appreciation of the Japanese currency, especially as Japanese finance minister Yoshihiko Noda said that simulated interventions are currently being conducted.

“Coordinated action may be a distant prospect, but unilateral intervention cannot be ruled out,” said Daragh Maher, deputy head of global foreign exchange strategy at Credit Agricole.

The yen’s earlier decline had helped Japan’s Nikkei advance 0.8 percent to 9,098.39.

However, since Japan’s markets closed, the yen has strengthened once more — by late afternoon London time, the dollar was down 0.1 percent at 83.81 yen.

The euro meanwhile was flat on the day at $1.2725, while the pound fell 0.2 percent at $1.5444, with sentiment dented by news of the biggest British trade deficit since August 2005.

The country’s statistics office reported that Britain’s trade deficit widened to 4.9 billion pounds in July from 3.9 billion in June as exports dipped and imports surged, fueling concerns about third quarter economic growth.

The figures came ahead of the Bank of England’s monthly interest rate decision. No policy changes were announced — as expected.

Elsewhere in Asia, Hong Kong’s Hang Seng index added 0.4 percent to 21,167.27 but the benchmark Shanghai Composite Index lost 1.4 percent to 2,656.35.

Real estate companies were among the major fallers in China, with Poly Real Estate dropping 4.1 percent, while China Vanke lost 3.4 percent.

China is due to release trade and other economic indicators on Friday, with an update on inflation scheduled for Monday, adding to worries that signs of a rebound in property dealings might prompt fresh measures to discourage speculative buying.

“Investors are jittery over possible future policy adjustments both for industries and for the currency,” said Liu Kan, an analyst at Guoyuan Securities in Shanghai.

And Australia’s S&P/ASX 200 climbed 1 percent to 4,582.20 a day after the country’s Labour Party secured support from independent lawmakers to form a new government.

South Korea’s Kospi gained 0.3 percent to 1,784.36 after the Bank of Korea left its key interest rate near a record low for a second straight month, citing risks to the global growth outlook.

The strong U.S. data boosted oil prices too amid hopes that demand will hold up. Benchmark crude oil for October delivery was up $1.15 at $75.82 a barrel in electronic trading on the New York Mercantile Exchange.

AP Business Writer Elaine Kurtenbach in Shanghai contributed to this report.