World stocks buoyant by more US earnings cheer, solid housing data

World stocks buoyant amid more US earnings cheer

LONDON — World stock markets rallied strongly Thursday — with some hitting new highs for 2009 — after another batch of stronger than expected corporate earnings and more signs that the U.S. housing market has stabilized.

In Europe, the FTSE index of leading British shares closed up for the ninth day in a row, its longest run of gains since an 11-day advance in December 2003. It ended up 66.07 points, or 1.5 percent, at 4,559.80 while Germany’s DAX rose 125.72 points, or 2.5 percent to close at a 2009 high of 5,247.28. The CAC-40 in France was 68.65 points, or 2.1 percent, higher at 3,373.72 — just off its 2009 closing high of 3,396.22 achieved in early January.

All three indexes were down earlier in the session but an upbeat opening on Wall Street prompted renewed buying. The Dow Jones industrial average broke above its highest closing level of 2009 and was trading up 179.71 points, or 2 percent, at 9,060.97 around midday New York time. That’s the first time it has broken above 9,000 since early January.

The broader Standard & Poor’s 500 rose 20.47 points, or 2.2 percent, to 974.54 — further buying Thursday could see it breach the 1,000 level for the first time since November.

The big rebound came after better than expected earnings from the likes of Ebay Inc., the pioneer of online auctions, AT&T Inc., the biggest telecommunications company in the U.S. and carmaker Ford Motor Co.

The best performer on the Dow in early trading was manufacturing conglomerate 3M Co., which jumped nearly 4 percent after it reported better than expected earnings amid higher sales of respiratory products used to prevent the spread of swine flu.

“Better-than-expected numbers from the likes of Ford and eBay seemed to have soothed investors that it is not just the banking sector that has benefited from the pick up in the last quarter, and these could be the first solid signs of a real economic recovery,” said Anthony Grech, market strategist at IG Index.

Markets around the world have rallied for over a week on strong U.S. earnings reports from a range of U.S. companies like heavy equipment maker Caterpillar Inc., Apple Inc. and Coca Cola Inc. The initial momentum came from U.S. banks’ reports, particularly Goldman Sachs Group Inc., but Wells Fargo & Co. and Morgan Stanley Co. provided a timely reminder Wednesday of the problems still facing the industry, particularly in the commercial property market.

Investors were further cheered by a report from the National Association of Realtors showing that existing home sales rose by 3.6 percent in June — the third straight monthly increase.

“They showed a small increase for the third month running — nothing dramatic but a sprinkling of encouragement,” said David Buik, markets analyst at BGC Partners.

He said investors are also hopeful that Microsoft Corp. and Amazon Inc. will post “decent” results in after-hours statements.

While most of the focus this week has centered on U.S. earnings, the European reporting season is slowly kicking into gear, too, providing investors with crucial insights about whether the recession is easing as much as it apparently is in the U.S.

Thursday saw a slew of earnings in Europe, particularly in Switzerland, where upbeat comments from pharmaceuticals company Roche Holding AG and engineering company ABB Ltd helped their share prices rally around 3 percent. The share price of Credit Suisse AG, one of the country’s two heavyweight banks, was broadly unchanged after it reported in-line earnings.

Nevertheless, the recession in Europe continues to take its toll. Compass PLC, the world’s biggest caterer, for example reported worse than expected sales and the company’s share price was the biggest faller on the FTSE 100 index, down around 8 percent.

Earlier in Asia, the recent rally continued with Japan’s Nikkei 225 stock average closing up 69.78 points, or 0.7 percent, to 9,792.94 after better than expected export figures, while Hong Kong’s Hang Seng jumped 569.53, or 3 percent, to 19,817.70.

Elsewhere in Asia, South Korea’s Kospi closed up 0.2 percent, while mainland China’s Shanghai index added 1 percent. Australian shares, down 0.1 percent, were among the few losing markets.

Oil prices rallied in line with stocks, with benchmark crude for September delivery up $1.12 at $66.52 a barrel in electronic trading on the New York Mercantile Exchange.

The dollar rose 1.3 percent to 94.80 yen while the euro was up 0.6 percent at $1.4285.

Hans Redeker, global head of foreign exchange strategy at BNP Paribas, said the yen has come under “significant pressure on reports that Japanese retail investor appetite for higher yield products is picking up again.”

He noted that there has been a significant increase for investment plans incorporating higher yielding currencies such as the Australian dollar and the South African rand.

Though benefiting against the yen, the dollar has encountered selling pressure against the euro — as investors grow more willing to take on risk, stocks have rallied and the dollar has dropped against the euro.

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AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.