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Japan, Germany Lead World Markets Higher

by Toby Sterling
Friday Jan 25, 2013

An improving economic outlook for Germany and promises of more monetary easing in Japan helped stock indexes in those countries lead world markets higher Friday.

In Japan, a government official indicated that the yen has further to fall, and its ongoing decline is expected to help big exporters like Sony. The Nikkei index surged 2.9 percent to 10,926.67, its highest close since April 30, 2010.

In Germany, business sentiment as measured by the Ifo index rose to its highest level since June, as executives said order backlogs are rising.

The Ifo report "nicely illustrates the green shoots in the German economy," said ING senior economist Carsten Brzeski in Brussels.

"Even if the current harsh winter weather might delay the blossoming somewhat, growth should return, leaving the contraction of the fourth quarter quickly behind."

Germany's DAX rose 1.3 percent to 7,848.56 points, by far the strongest performer in Europe. France's CAC-40 was up 0.7 percent to3,777.68.

But Britain's FTSE 100 edged up only 0.1 percent, to 6,273.21, after official figures showed the U.K. economy contracted 0.3 percent in the fourth quarter. If it shrinks for another quarter, it would be back in a technical recession, defined as two consecutive quarters of contraction.

The fourth quarter drop was worse than expected and shows the economy is struggling to make any lasting recovery.

Meanwhile, Wall Street appeared headed for gains, following the news out of Germany and Japan. Dow Jones industrial futures were 0.2 percent higher at 13,813.00 while the broader S&P 500 futures gained 0.3 percent to 1,496.50.

U.S. investors may also have been cheered by news that emergency loans to banks made by the European Central Bank are being repaid at a faster clip than expected.

That is taken as more evidence that the European outlook is improving, or at least that disaster scenarios are becoming less likely. It has the added benefit of driving the euro higher against the dollar, which helps U.S. exporters' competitiveness. The common European currency was up 0.6 percent to $1.3460.

Currency concerns abounded earlier in Asia as the dollar rose another 0.6 percent against the Japanese yen, to 90.92.

South Korea's Kospi fell amid fears that the country's exporters may be slammed by the yen's weakening. The benchmark fell 1 percent to 1,943.97.

Hong Kong's Hang Seng lost 0.1 percent to 23,580.43 while Australia's S&P/ASX 200 rose 0.5 percent to 4,835.20.

In mainland China, the Shanghai Composite Index fell 0.5 percent to 2,291.30 and the smaller Shenzhen Composite Index lost 0.2 percent at 909.52.

Benchmark oil for March delivery was up 39 cents to $96.34 per barrel in electronic trading on the New York Mercantile Exchange.

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