World stocks cautious ahead of Fed

AP News
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Posted: Apr 27, 2011 6:44 AM
World stocks cautious ahead of Fed

World stocks drifted higher Wednesday as investors awaited Federal Reserve chairman Ben Bernanke's first news conference for clues on the future course of the U.S. economy, while the dollar traded near 16-month lows against the euro.

The German DAX blue chip index rose 0.7 percent to 7,407.23, Britain's FTSE was flat at 6,067.76 and in Paris the CAC 40 rose 0.5 percent to 4,063.85.

U.S. futures pointed to a slightly higher open, with the Dow futures up 0.3 percent at 12,554 and the broader Standard & Poors up 0.3 percent at 1,345.40.

Bernanke was expected to discuss the outlook for growth and to confirm the Fed will end its $600 billion bond-buying program to expand the supply of money in the economy on schedule in June, although many expect the Fed may continue to invest proceeds from maturing bonds.

The dollar slipped 0.2 percent against the euro to $1.4673, near 16-month lows against the 17-nation currency. The dollar has slid on expectations that interest rates will remain at their record lows in the United States _ the key Fed rate is 0-0.25 percent _ while European Central Bank will keep raising rates later this year after a quarter point increase earlier this month.

Stronger earns for Volkswagen helped send the DAX higher. The company sharply increased net profit to euro1.71 billion on strong profit margins and rising sales in emerging markets. Truck maker Volvo boosted the auto sector as well by doubling its net profits.

Earnings from Credit Suisse were slightly better than expected, though Barclays bank in London saw its shares slump 5 percent as its net profit fell.

Nokia, meanwhile, saw its stock jump more than 3 percent after it said it would lay off 4,000 workers worldwide.

Asian stocks headed higher after better-than-expected corporate earnings and rising consumer confidence sent Wall Street its highest levels in nearly three years.

Japan's Nikkei 225 rose 1.5 percent to 9,697.81, as stocks in the country's behemoth export sector rose. Toyota Motor Corp., the world's No. 1 automaker last year, rose 0.2 percent. Honda Motor Corp. added 1.5 percent and Nissan Motor Co. gained 1.3 percent.

South Korea's Kospi index slipped 0.5 percent to 2,195.13 despite the country's economic growth rate accelerating sharply in the first quarter of this year. Gross domestic product expanded 1.4 percent in the three months ended March 31. However, high inflation for food and gasoline weighed on consumer spending.

Hong Kong's Hang Seng index rose 0.4 percent to 24,105.07. Benchmarks in Singapore, Taiwan and Indonesia also rose. Australia's S&P/ASX 200 was down 0.7 percent to 4,879.20.

On Wall Street, stocks jumped to their highest levels in nearly three years Tuesday thanks to improved consumer confidence and signs that earnings are rising for U.S. companies.

Delta Air Lines Inc. jumped 11 percent after reporting a loss that was far smaller than investors had expected. Ford Motor Co. rose nearly 1 percent after the carmaker reported its best first quarter earnings since 1998. Ford beat Wall Street's earnings estimates with stronger sales of new vehicles.

Stocks also got a lift from a report on consumer confidence that showed that worries about rising prices and unemployment eased in April.

The dollar dropped slightly against the Japanese yen to 81.75.

Benchmark crude for June delivery slipped 23 cents to 111.98 per barrel in electronic trading on the New York Mercantile Exchange.