World stocks up on hopes of Greece debt resolution

AP News
Posted: Jun 29, 2011 5:52 AM
World stocks up on hopes of Greece debt resolution

Hopes that Greece will enact an unpopular set of austerity measures to prevent the country from defaulting on its massive debts sent world stocks higher Wednesday.

Oil prices bounded above $93 a barrel after a report showed U.S. crude supplies dropped more than expected last week, suggesting demand is improving. In currencies, the dollar was lower against the euro and the yen.

European shares rose sharply in early trading. Britain's FTSE 100 was 1.2 percent higher at 2,834.26 and Germany's DAX rose 1.3 percent to 7,265.34. France's CAC-40 was up 1.1 percent at 3,895.66.

Wall Street was also headed for a higher opening, with Dow Jones industrial futures gaining 0.2 percent to 12,169 and S&P 500 futures rising 0.3 percent to 1,298.40.

The Greek parliament will vote later Wednesday on a slew of measures, including tax and spending cuts and sales of state enterprises, that must be approved for the country to secure the next installment of emergency loans from international lenders. The government has said its funds will dry up by mid-July, after which it will be unable to pay salaries and pensions, or service its debts.

Asian shares were higher earlier in the day, carrying over the momentum from an upswing on Wall Street.

Japan's Nikkei 225 rose 1.5 percent to close at 9,797.26 after the government said the country's industrial production rose 5.7 percent in May.

While the number was lower than the government's rosier forecast of 8 percent, the improvement adds to signs that the world's No. 3 economy is rebuilding after a March 11 earthquake and tsunami decimated the country's industrial northwest.

Automakers gained sharply a day after releasing production figures that indicated improving conditions, with Nissan Motor Co. posting year-on-year output gains in Japan and overseas.

Nissan rose 2.7 percent. Toyota Motor Corp., the world's top automaker, was 1.7 percent higher. Rival Honda Motor Corp. gained 1.8 percent.

South Korea's Kospi climbed 1.5 percent to 2,094.42, pushed up by automakers. Hyundai Motor Co., the country's largest automaker, gained 3.5 percent. Kia Motors Corp. was 2.7 percent higher.

Hong Kong's Hang Seng closed flat at 22,061.18, although gains in oil-related companies helped mute losses. China National Offshore Oil Corp., known as CNOOC, rose 1.7 percent.

Australia's S&P/ASX 200 rose 1.2 percent to 4,529.50. Benchmarks in Singapore, Taiwan and Thailand were also higher while those in the Philippines and New Zealand fell.

Mainland Chinese shares sank in response to an announcement by China's National Audit Office on Monday that local governments have piled up debts of $1.6 trillion _ raising concerns that Chinese banks might be hurt if borrowers cannot repay loans.

"All of a sudden, they have discovered that local governments have mountains of debt that they cannot repay. So the central government has to step in and save them," said Hong Kong-based analyst Francis Lun. "That came as quite a shock _ to the banks at least."

Hong Kong-listed Bank of China Ltd., one of the country's four major state-owned commercial lenders, fell 1.6 percent, while Agricultural Bank of China Ltd., its largest rural lender, fell 1.2 percent.

The Shanghai Composite Index lost 1.1 percent to 2,728.48, and the Shenzhen Composite Index also fell 1.1 percent to 1,139.86. Shares in cement, banks, real estate and nonferrous metals weakened as investors cashed in on recent gains. Fujian Cement tumbled 5.5 percent while China Minsheng Banking Corp. was 4.2 percent down.

In New York on Tuesday, the Dow gained 1.2 percent to 12,188.69. The Standard & Poor's 500 index rose 1.3 percent to 1,296.67. The Nasdaq composite index added 1.5 percent to 2,729.31.

Signs that the housing market is improving helped lift shares. Home prices rose in April in 13 of the 20 U.S. cities tracked by the Standard & Poor's/Case-Shiller index _ the first time in eight months.

Quarterly results from Nike Inc. bested analyst expectations, helping lead to a rally in stocks of clothing stores, restaurants and jewelers. Such companies tend to do well when consumers are less worried about things like high gas prices and are willing to spend on themselves.

In energy trading, benchmark crude for August delivery was up 50 cents to $93.39 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained $2.28 to settle at $92.89 per barrel Tuesday. Prices were on the upswing, with the American Petroleum Institute noting late Tuesday that crude inventories fell 2.7 million barrels last week, suggesting that demand was improving.

The euro bounced to $1.4394 from $1.4364 late Tuesday in New York. The dollar slipped to 81.07 yen from 81.10 yen.