World stocks regain footing after wild week

World stocks rose on Monday as a measure of stability returned to markets after last week’s dizzying swings and data showed the economy of earthquake-battered Japan shrank less than expected.

Oil prices hovered above $85 a barrel. The dollar rose against the yen but lost ground against the euro.

European shares were higher in early trading. Britain’s FTSE 100 rose 0.6% to 5 351.81. Germany’s DAX climbed 1% to 6 059.70 and the CAC-40 in Paris was up 0.7% at 3 236.28.

Wall Street was also headed higher, with Dow Jones industrial futures up 0.6% at 11 314. Broader S&P 500 futures rose 0.6% to 1 184.10.

Global markets fluctuated wildly last week as investors already concerned over Europe’s worsening debt crisis were further rattled by the downgrade of Washington’s credit rating and signs the US might be headed toward recession.

According to Citibank Global Markets, emerging market equity funds saw the third-largest weekly outflow on record, with $7.7-billion redeemed. The largest redemption was $10.7-billion in January 2008.

Japan’s Nikkei 225 index closed 1.4% higher at 9 086.41 after the government announced the economy had contracted at an annualised rate of 1.3% in the April to June quarter.

While that was the third straight quarter of contraction for the world’s third-largest economy, it was better than a 2.6% fall forecast in a Kyodo News agency survey of analysts.

Japan’s economy was thrown into a tailspin by the March 11 earthquake and tsunami that devastated much of the country’s industrial north-east. Entire towns were washed away. Infrastructure, utilities and factories vital to production were destroyed.

Video game maker Nintendo soared 9.8% on hopes it would become a component of the Nikkei 225 index if the Tokyo Stock Exchange acquires the Osaka Securities Exchange.

Greater confidence
Among other Asian indexes, Hong Kong’s Hang Seng shot up 3.3% to 20 260.10 and Australia’s S&P/ASX 200 index climbed 2.4% to 4 272.50. South Korea’s market was closed for a public holiday.

Mainland Chinese shares gained for a fifth trading day on expectations the government announce new measures to support growth, analysts said. The Shanghai Composite Index added 1.3% to 2 626.77 and the Shenzhen Composite Index rose 1.4% to 1 175.41.

“Investors are more confident after the last few days of gains following the upheavals in global markets, while at the same time expecting the release of fresh monetary measures,” said Cai Dagui, an analyst at Ping’an Securities, based in Shenzhen.

A rebound in retail sales in July pushed Wall Street higher on Friday, the first time since early July that the Dow Jones industrial average and S&P 500 index rose for two consecutive days.

The US Federal Reserve last week signalled that it would keep interest rates super-low for two more years because of expectations that unemployment will remain high and economic growth slow.

Strengthened currencies
The Fed’s decision came after the government said the US economy had barely expanded in the first six months of this year.

Benchmark oil for September delivery was up 22 cents to $85.60 a barrel in electronic trading on the New York Mercantile Exchange. Crude fell 34 cents to settle at $85.38 on Thursday.

In London, Brent crude was up 53 cents to $108.56 per barrel on the ICE Futures exchange.

The euro strengthened to $1.4304 from $1.4245 late on Friday in New York. The dollar rose to 76.79 yen from 76.75 Japanese yen. — Sapa-AP

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