Stocks get boost from US economy hopes

December 23, 2011 - 7:50 AM

LONDON (AP) — Global stocks advanced Friday on further signs the U.S. economy is improving, but trading activity was muted as the traditional holiday slowdown began in earnest.

Investors have taken heart from figures Thursday showing that the number of initial jobless claims in the U.S. unexpectedly fell 4,000 last week to 364,000, the lowest level since April 2008. A fairly upbeat U.S. consumer confidence survey from the University of Michigan helped sustain the positive sentiment before the European close.

The figures provided further evidence that the U.S. economy, the world's largest, has got through its soft patch earlier this year and may be poised for stronger-than-anticipated growth in the fourth quarter.

"The interesting point in these claims data is that they continue to signal that the financial market ructions that kicked-off in late July this year have not made a meaningful impact on the U.S. real economy," said Adrian Foster, an analyst at Rabobank International.

The news that Italian Premier Mario Monti easily won a vote of confidence in the Senate on Thursday has also cheered investors, as it signaled parliamentary approval of the government's euro30 billion ($39 billion) package of tax hikes and pension changes.

The austerity package is intended to save the country from financial disaster and follows rising concerns in the markets that Italy will find it difficult to pay off its massive debts, which stand at around euro1.9 trillion ($2.5 trillion).

"A combination of Italian PM Monti's success in gaining approval for his austerity package and continuing economic progress in the U.S. is the catalyst for the markets drive at present," said Jordan Lambert, a trader at Spreadex.

In Europe, Germany's DAX rose 0.4 percent to 5,873 while the CAC-40 in France was 1.1 percent higher at 3,105. The FTSE 100 index of leading British shares, which only traded for a half day, closed up 1 percent at 5,512.70.

Trading volumes were low as many investors take vacations over Christmas and New Year. Many markets close early on Friday and most are closed Monday for Christmas.

The euro was also fairly solid, trading 0.1 percent higher at $1.3073.

Wall Street was poised for a fairly solid opening — Dow futures were up 0.5 percent at 12,158 while the broader Standard & Poor's 500 futures rose by the same rate to 1,256.

The last batch of major U.S. economic data will be released before the bell, the highlight likely to be November durable goods orders figures. They are expected to show orders rising 2.2 percent during the month, following two straight monthly falls.

Earlier in Asia, China's benchmark in Shanghai gained 0.9 percent to 2,204.78 and Hong Kong's Hang Seng rose 1.4 percent to 18,629.17. Japan's financial markets were closed for a public holiday.

Oil prices tracked equities higher — benchmark crude for February delivery was up 35 cents to $99.88 a barrel in electronic trading on the New York Mercantile Exchange.

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Alex Kennedy in Singapore contributed to this report.