World markets advance after Dow logs highest close since May on hopes for Fed action

Tuesday, September 21, 2010

World shares rise amid hopes for Fed action

BANGKOK — World stock markets clocked moderate gains Tuesday as hopes for more action by the Federal Reserve to prop up the U.S. economy extended Wall Street’s rally into a fourth week.

As the Fed meets to discuss interest rates there is a growing expectation that the central bank’s rate-setting committee could relaunch programs to buy Treasury and mortgage bonds — lowering rates on such debt to stimulate the economy in a move known as quantitative easing.

An influential private research group’s finding that the “Great Recession”, which started in December 2007, had ended in June 2009 also helped to lift sentiment.

Analysts expect growth in Asia to remain robust over the next year despite weakness in advanced nations. Still, any improvement in the sluggish U.S. economy — a key market for the Asia’s exporters — would be a boost for the region.

“Market participants are waiting for tonight to learn whether the Fed unveils any new asset purchase plan or hints at doing so in future,” brokers India Infoline said in a report.

As trading got going in Europe, France’s CAC-40 was up 0.5 percent at 3,805.84, Germany’s DAX added 0.2 percent to 6,310.29 and Britain’s FTSE 100 was ahead by 0.3 percent at 5,622.02. Wall Street was set for slight gains with Dow futures up 4 points, or less than 0.1 percent, at 10,675.

Japan’s Nikkei 225 stock average surrendered early gains to close down 23.98 points, or 0.3 percent, at 9,602.11 as the country returned from a Monday holiday. Investors were keeping watch on rising tensions with China over the detention of a Chinese fishing boat captain near disputed islands. Beijing severed high-level contacts with Japan on Sunday and called off a visit by Japanese youth to Shanghai.

Japanese consumer electronics retailer Yamada Denki Co. lost 1.3 percent amid concerns about a potential drop-off in Chinese tourists.

Hong Kong’s Hang Seng index rose 0.1 percent to 22,002.59 and Singapore’s benchmark gained 0.2 percent to 3,088.34.

The Shanghai Composite Index inched higher by 0.1 percent to 2,591.55 while Australia’s S&P/ASX 200 dropped 0.3 percent to 4,617.50.

Benchmarks in Taiwan, India, and Indonesia rose. South Korean financial markets were closed for a national holiday.

In New York on Monday, the Dow Jones industrial average rose 145.77 points, or 1.4 percent, to 10,753.62 in its highest close since May. The broader Standard & Poor’s 500 index rose 1.5 percent to 1,142.71. The Nasdaq composite rose 1.7 percent, to 2,355.83.

In currencies, the dollar fell to 85.35 yen from 85.72 yen. The euro rose to $1.3132 from $1.3063.

Benchmark crude for October delivery was down 59 cents at $74.27 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.20 to settle at $74.86 on Monday.

will not be displayed