European, US stocks rise on smaller trade deficit

AP News
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Posted: Dec 10, 2009 10:54 AM

European markets rose Thursday and Wall Street opened higher as improved U.S. trade figures offset disappointing employment data from the world's largest economy.

In afternoon trading in Europe, Britain's FTSE 100 was 0.9 percent higher at 5,248.26, Germany's DAX rose 1.4 percent to 5,724.06 and France's CAC 40 grew 0.8 percent to 3,788.66.

In early trading in New York, the Dow Jones industrial average gained 0.8 percent to 10,414.37 and the Standard & Poor's 500 index added 0.7 percent to 1,103.61.

Asian markets were mixed as worsening government finances in the West and weak economic figures in Japan continued to shake investors' confidence in a global recovery. Tokyo's benchmark Nikkei 225 stock average fell 1.4 percent to 9,862.82. Hong Kong's Hang Seng retreated 0.2 percent to 21,700.04, while South Korea's Kospi rose 1.1 percent to 1,652.73.

Wall Street opened higher after a report showed a surge in exports helped narrow the trade deficit in October to $32.9 billion. Economists had been expecting an increase. The rise in exports was driven by a weaker dollar, which helps boost overseas demand for U.S. exports.

The trade data helped offset slightly disappointing jobs numbers that showed the number of laid-off workers seeking jobless benefits rose more than expected last week to 474,000. Economists had been expecting 460,000.

Earlier, investors in Europe and Asia remained unsettled after a top ratings agency lowered its credit rating outlook on Spain to negative. Wednesday's move by Standard & Poor's raised more fears about the consequences of governments piling up massive debts as they support battered economies with unprecedented stimulus spending.

It also added to warnings from other ratings agencies about government finances in Britain and the U.S., as well as downgrades of Greece and state-linked companies in debt-laden Dubai.

"We have still got these concerns over sovereign debt and these are factors still undermining confidence to some extent," said Keith Bowman of Hargreaves Lansdown Stockbrokers. "Although Spain has been brought under the umbrella, their position is still significantly better than Greece and investors are still evaluating those positions."

In Britain, the Bank of England held its interest rates steady at 0.5 percent and left its 200 billion pound ($325 billion) asset purchasing program unchanged, as widely expected.

Banks gave impetus to European markets, led by Royal Bank of Scotland, which jumped 4.6 percent. Its advance followed speculation over the sale of a stake in its commodities trading venture, according to Anthony Grech, market analyst at IG Index.

Meanwhile, economic news in Asia gave investors more reason to worry about a pullback in the markets, which have risen dramatically from their crisis lows in March.

Japan's core machinery orders, a closely watched indicator of corporate capital spending, tumbled 4.5 percent in October from a month earlier, suggesting that companies are reigning in spending as the recovery in the world's No. 2 economy slows.

Ben Kwong Man Bun, the chief operating officer at KGI Asia Limited in Hong Kong, said uncertainties surrounding the U.S. economy and the financial system, given troubles in Dubai and other countries, were leading investors to book gains from this year's rally.

"All this is a very good excuse to lock in their profits and go on holiday before the end of the year," he said. "Market sentiment remains relatively cautious."

Elsewhere, Australia's market shed 0.7 percent as sinking commodity prices weighed on resource companies like BHP Billiton and Rio Tinto, overshadowing upbeat news of an unexpectedly sharp rise in new jobs last month.

China's Shanghai index climbed 0.5 percent. Thailand's stock market was closed for a national holiday.

Oil prices rose 42 cents to $71.09 a barrel in European trading. The contract dropped $1.95 to settle at $70.67 on Wednesday.

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AP Business Writers Stephen Wright in Bangkok and Jeremiah Marquez in Hong Kong contributed to this report.