Stocks get boost from upbeat US data; apparent Bank of Japan intervention fails to weaken yen

Stocks get boost from upbeat US economic data

LONDON — Buoyant U.S. industrial figures helped shore up sentiment in the markets, sending stocks higher Friday while the impact of the Bank of Japan’s latest apparent intervention to weaken the yen proved short-lived.

In Europe, the FTSE 100 index of leading British shares closed up 0.9 percent at 5,598.48 while Germany’s DAX rose 1.8 percent to 6,298.3. The CAC-40 in France was 1.9 percent higher at 3,782.48.

In the U.S., the Dow Jones industrial average was up 1.7 percent, at 10,843.53 soon in midday trading New York time, while the broader Standard & Poor’s 500 index rose 1.9 percent, to 1,146.49.

European markets and Wall Street futures had been trading lower, but upbeat U.S. durables goods data prompted the recovery.

The Commerce Department said orders for durable goods excluding transportation orders jumped 2 percent in August, double the amount expected by economists. It was the biggest jump in orders in five months and helped soothe concerns about the pace of the U.S. economic recovery following a run of disappointing economic data.

Overall orders including transportation did fall 1.3 percent, but that number is often severely impacted by month-to-month swings in orders for new aircraft.

“The devil continues to be in the detail of this report, as large swings in commercial aircraft and defense orders cause the headline to consistently miss consensus expectations,” said Michael Woolfolk, an analyst at Bank of New York Mellon. “While the headline number was a modest disappointment, everything else proved positive.”

Earlier, the news that German business confidence unexpectedly rose in September, as measured by the Ifo Institute, was diluted by the fact that most businesses in Europe’s biggest economy expect tougher conditions in the months ahead as the global economic recovery slows down.

Most activity in the markets Friday centered on an apparent intervention in the currency markets by the Bank of Japan to stem the export-sapping appreciation of the yen.

Indications that the central bank was back in the market buying dollars and selling yen pushed the U.S. currency up from around 84.50 yen to over 85 yen. However, by mid-afternoon London time, the dollar was down 0.1 percent at 84.32 yen.

The dollar has been in retreat since Tuesday when the U.S. Federal Reserve indicated that it was ready to announce fresh measures to boost the flagging U.S. economy.

The markets are now anticipating that the Fed will turn on the taps once again at its next rate-setting meeting in early November, and that the fresh supply of dollars could lead to further weakness in the currency despite the slowdown in economic growth implicit within Thursday’s figures.

After falling Thursday following weak euro-zone data and renewed jitters about Ireland’s debt problems following news that the country shrank a further 1.2 percent in the second quarter, the euro was up 1.2 percent Friday at $1.3474.

Earlier in Asia, Japan’s Nikkei 225 stock average, which was closed Thursday, lost 1 percent to 9,471.67 as the strong yen pressured exporters.

Elsewhere, Hong Kong’s Hang Seng index rose 0.3 percent to 22,119.43 while Australia’s S&P/ASX 200 fell 0.7 percent to 4,601.90.

The turnaround in stocks boosted oil prices too — benchmark crude for November delivery was up $1.13 at $76.31 a barrel in electronic trading on the New York Mercantile Exchange.

Associated Press Writer Alex Kennedy in Singapore contributed to this report.