Europe stocks higher ahead of Wall St. open

November 14, 2008 3:43:06 PM PST
European markets rose strongly Friday after hefty day-earlier gains on the U.S. and an overnight rally in Asia as investors bought up heavily sold-off stocks. The FTSE 100 index of leading British shares was up 165.17 points, or 4.0 percent, at 4,334.38, with mining and energy stocks, like Royal Dutch Shell and Anglo American PLC leading the charge higher, up 7 percent and 9 percent.

Germany's DAX rallied 183.42 points, or 3.9 percent, to 4,832.94, with shares in Continental AG up 27 percent as privately owned ball-bearings company Schaeffler said it was confident of getting EU approval to buy the tire company, possibly by the end of the year.

Meanwhile, the CAC-40 in France was 87.48 points, or 2.7 percent, higher at 3,356.94.

The gains in Europe followed a strong performance in Asia where Japan's benchmark Nikkei 225 stock average rose 223.75 points, or 2.7 percent, to 8,462.39, and Hong Kong's Hang Seng advanced 321.31, or 2.4 percent, to 13,542.66.

The rise in Europe and Asia was primarily due to sharp gains on Wall Street on Thursday. A late turnaround helped the Dow Jones industrial average advance more than 550 points, its third biggest daily points gain ever, to 8,835.25 after a stream of negative corporate and economic news had driven the index earlier towards its lowest level this year.

However, Wall Street is not expected to repeat the performance when it opens later on fears that a closely-watched report on retail sales in the U.S. will make for grim reading. Dow futures shed 110, or 1.26 percent, to 8,720. Standard & Poor's 500 futures dropped 9.80, or 1.08 percent, to 897.90. Nasdaq 100 index futures stumbled 4.75, or 0.38 percent, to 1,229.75.

Analysts said the U.S. retail sales data for October could be the key to how the week ends. Many economists expect the report to be especially grim, given the bad news on employment, the financial crisis and plunging consumer confidence. Analysts are looking for retail sales to have fallen 2 percent in October, almost double the 1.2 percent drop in September, which had been the biggest setback in three years.

"Any positive surprises here could easily give stocks another lift in the near term but if this week has shown us anything it's surely that volatility remains a dominant theme," said CMC Markets dealer Matt Buckland.

This weekend's meeting of the Group of 20 leaders in Washington to discuss the world economy and its architecture is not expected to prompt any change in sentiment in markets.

"At least, financial markets are unlikely to be disappointed by this weekend's G-20 summit; they are not expecting much from it," said Stephen Lewis, an analyst at Monument Securities.

The meeting comes as some experts said the world's developed countries probably have already entered a recession. The Paris-based Organization for Economic Cooperation and Development said gross domestic product for its 30 market democracies would shrink 1.4 percent this quarter and keep contracting until the middle of next year.

Earlier, mainland China's key index rose 3.1 percent, while markets in Australia and Singapore rose above 1 percent. South Korea's Kospi ended flat after giving up an early rise.

Oil prices were steady around $58 a barrel Friday after rising overnight on speculation that the oil cartel OPEC will be cutting production again soon.

Light, sweet crude for December delivery was up 29 cents at $58.53 a barrel, after rising as high as $59.96 earlier.

The dollar fell 1.5 percent to 96.34 yen while the euro was down 0.5 percent at $1.2709.


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