World markets power ahead as better US economic data boost optimism; dollar remains weak

World markets rise after better US economic data

HONG KONG — World stock markets rose Wednesday, lifted by better news about the U.S. economy and comments from the Federal Reserve’s chairman that the recession was likely over.

Major benchmarks in Korea, Hong Kong and Australia were up about 2 percent or more, following on the heels of more gains on Wall Street. Meanwhile, the dollar continued to flounder, hitting its lowest point against the euro this year and sinking further against the yen.

Optimism about the world’s largest economy was supported by figures showing U.S. retail sales jumped in August by the biggest amount in three years, as well as news a key measure of New York manufacturing climbed to its best level since 2007.

Adding to the feel-good mood, Fed Chairman Ben Bernanke declared America’s worst recession since the 1930s has “very likely” ended, even as he warned high unemployment and other troubles could drag on.

Despite signs of a turnaround, the economy’s momentum may be difficult to sustain in coming quarters, analysts said. Tim Schroeders, a fund manager at Pengana Capital Ltd. in Melbourne, says Asian markets could see a 10 percent decline later this year.

“I think the markets have run ahead of the economy for the time being,” said Schroeders, who helps manage about $1 billion in assets. “We’re probably going to see a slowdown in the fourth quarter this year, which will be a fairly dramatic headwind to overcome.”

In Europe, Britain’s FTSE 100 and France’s CAC-40 each added about 0.9 percent, while Germany’s DAX advanced 0.7 percent. Futures pointed to a higher open Wednesday for U.S. stocks.

Japan’s benchmark Nikkei 225 index gained 53.15 points, or 0.5 percent, with stocks helped by hopes the country’s incoming government, set to be inaugurated later in the day, won’t make big changes to economic policies.

Hong Kong’s Hang Seng was up 536.55 points, or 2.6 percent, at 21,402.92. In Korea, the Kospi added 1.8 percent to 1,683.33.

Most other markets gained as well: India’s Sensex climbed 0.8 percent, Taiwan’s benchmark rose 1.3 percent and Australia’s index jumped 2.4 percent.

Only China’s market, which is relatively closed to foreign investors and often moves out of step with global stocks, was lower. The Shanghai benchmark fell 1.1 percent to 2,999.71.

On Wall Street, the Dow rose 56.61, or 0.6 percent, to 9,683.41, its highest close since Oct. 6, when it finished at 9,956.

The S&P 500 index rose 3.29, or 0.3 percent, to 1,052.63, while the Nasdaq composite index rose 10.86, or 0.5 percent, to 2,102.64. All three indicators are at their highest levels for 2009.

Stock futures pointed to more gains Wednesday on Wall Street. Dow futures were up 38, or 0.4 percent, to 9,700 and S&P futures gained 2.4, or 0.2 percent, to 1,050.30.

Oil prices hung below $71, with benchmark crude for October delivery off 28 cents to $70.65 a barrel. The contract rose $2.07 overnight.

The dollar dropped to 90.34 yen from 91.03 yen. The euro rose to $1.4691 from $1.4656.