World stock markets rise after Fed chief's speech

August 29, 2011 - 5:40 AM
Wall Street

A trader works on the floor of the New York Stock Exchange on Friday, Aug. 26, 2011 in New York. (AP Photo/Jin Lee)

BANGKOK (AP) — World stock markets rose Monday, with buying appetite getting a boost from Federal Reserve chief Ben Bernanke's prediction that the U.S. economy will eventually return to full health.

Oil prices lingered above $85 a barrel in Asia after Hurricane Irene did little damage to refineries along the U.S. East Coast. The dollar was lower against the yen and the euro.

European shares were mostly higher in early trading. Britain's FTSE 100 was little changed at 5,129.92 and Germany's DAX was up 1.4 percent at 5,615.56. France's CAC-40 rose 1.3 percent to 3,128.85.

Stocks on Wall Street were set to move higher, with Dow futures up 0.8 percent to 11,365 while S&P 500 futures were 0.9 percent higher at 1,186.50.

Market optimism was fueled after a highly anticipated speech by Bernanke at a conference in Jackson Hole, Wyoming. While he announced no new economic stimulus measures — as some investors had hoped — he did leave open the possibility of more action if another recession looks likely. He also emphasized the strengths of the U.S. economy and said the job market will recover in the long run.

"People came to realize that Bernanke is very confident about the economy," said Jackson Wong, vice president at Tanrich Securities in Hong Kong. "People were reluctant to get into the market. Now they are jumping back in."

Japan's Nikkei 225 rose 0.6 percent to close at 8,851.35 amid news that the country's ruling party elected Finance Minister Yoshihiko Noda its new chief, paving the way for him to be the next prime minister. Australia's S&P/ASX 200 gained 1.5 percent to 4,263.30 and Hong Kong's Hang Seng rose 1.4 percent to 19,865.11.

Hong Kong-listed Sinopec, Asia's largest refiner by capacity, jumped 6.7 percent after announcing that first-half profit rose 12 percent as higher oil, gas and chemicals revenues helped offset a loss in its refining business. The results for the company, also known as China Petroleum & Chemical Corp., were better than analysts had forecast.

South Korea's Kopsi index jumped 2.8 percent to 1,829.50. Leading shipbuilder Hyundai Heavy Industries Co. soared 9.1 percent. Hynix Semiconductor, the world's second-largest memory chip maker, jumped 8.4 percent on brighter chip price forecasts, Yonhap News agency said. Refinery SK Innovation rose 7.1 percent.

Gold shares rose after prices of the precious metal rebounded Friday after a volatile week. Newcrest Mining Ltd., Australia's largest gold miner, rose 1.5 percent. Hong Kong-listed Zijin, China's top gold miner, was 1.2 percent higher. Hong Kong jewelry chain Chow Sang Sang Holdings gained 4.7 percent.

Other Australian metals shares rose on the back of higher commodities prices. BHP Billiton Ltd., the world's largest mining company, rose 1.3 percent. Rio Tinto Ltd. gained 2.1 percent.

Mainland Chinese shares lost ground, with the benchmark Shanghai Composite Index falling 1.4 percent to 2,576.41. T he Shenzhen Composite Index slipped 0.9 percent, to 1,159.52. Shares in food and traveling related companies advanced on expectations upcoming holidays will boost demand, while shares in financial companies weakened.

"Property shares were sold on speculation the government might impose a windfall profits tax levy which could lead to a quite serious funds shortage," said Peng Yunliang, an analyst based in Shanghai.

Poly Real Estate dropped 3.5 percent while industry leader China Vanke fell 2.5 percent. China International Travel Service Corp. Ltd. gained 3.7 percent.

On Friday, the Dow Jones industrial average rose 1.2 percent to close at 11,284.54. The Standard & Poor's 500 index rose 1.5 percent to 1,176.80. The technology-heavy Nasdaq composite index rose 2.5 percent to 2,479.85.

The Fed has said it plans to keep short-term interest rates low until mid-2013. Low rates on investments like bonds make higher-risk bets such as stocks more attractive.

The U.S. economy is still hobbled by a depressed housing market, high oil prices and fears that the European debt crisis will deteriorate into a repeat of the 2008 financial crisis.

Benchmark oil for October delivery was up 18 cents to $85.55 in electronic trading on the New York Mercantile Exchange. Crude rose 7 cents to settle at $85.37 on Friday.

In London, Brent crude for October delivery was down 6 cents at $111.30 on the ICE Futures exchange.

In currencies, the euro was up at $1.4521 from $1.4484 in late trading in New York. The dollar fell to 76.63 yen from 76.66 yen.

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AP researcher Fu Ting contributed from Shanghai.