World stocks up as Greece debt talks continue
Thursday, 19 January 2012 | 12:26
World markets rose Thursday as investors grew more comfortable with riskier assets such as stocks after a pledge by the IMF to help stave off a financial crisis and as hopes rose for an agreement on the restructuring of Greece's debt.
Benchmark oil rose above $101 per barrel while the dollar fell against the euro and the yen.
European bourses were mostly higher in early trading. Britain's FTSE 100 fell 0.1 percent to 5,697.70. Germany's DAX rose 0.1 percent 6,359.08 and France's CAC-40 added 0.4 percent to 3,276.87.
Futures pointed to a lower open on Wall Street after shares rallied on Wednesday. Dow Jones industrial futures drifted marginally lower to 12,494 while S&P 500 futures lost 0.2 percent to 1,300.
Earlier Thursday, Asian shares posted broad gains. Japan's Nikkei 225 index rose 1 percent to close at 8,639.68. South Korea's Kospi rebounded 1.2 percent to 1,914.97 after a losing session Wednesday. Hong Kong's Hang Seng rose 1.3 percent at 19,942.95.
Benchmarks in Singapore and mainland China also rose. Markets in Taiwan were closed for Chinese New Year.
Analysts said investors were becoming more comfortable with taking on risk despite multiple headwinds _ including a likely recession in Europe, a possible debt default by Greece and a warning from the World Bank on Wednesday of a possible slump in global economic growth.
"Evidence that markets are becoming increasingly resilient to bad news emerged from the muted reaction to sharp downgrades in growth forecasts by the World Bank," Credit Agricole CIB in Hong Kong said in a research note.
Fears that the euro common currency might implode amid a mountain of sovereign debt eased Wednesday after the International Monetary Fund said it was looking at ways to raise another $500 billion for loans to struggling countries.
The IMF has put up roughly a third of the money given as rescue loans to European governments. But analysts cautioned that the crisis was far from over.
"What needs to be understood is that the IMF doesn't have enough money to help the eurozone countries. They could only get it from newly printed money from the ECB and that would mean inflation," said Martin Hennecke, associate director of Tyche Group in Hong Kong, referring to the European Central Bank.
"There's only two choices: Either you have bankruptcy of major countries like Italy, which would basically be Armageddon, or the ECB prints money and lends it to banks and the IMF, and that would mean high inflation."
For its part, Greece is running out of time to avoid becoming the first euro country to default on its debts and potentially trigger a chain reaction that could ultimately destabilize the global economy. Talks are taking place in Athens between the government and private creditors trying to negotiate a debt restructuring.
Negotiations resumed Wednesday after breaking down late last week amid disagreement over the terms of new bonds that Greece would issue to replace expiring bonds that it cannot afford to pay off. Greece needs to clinch the agreement quickly to qualify for more bailout loans before it faces a major bond repayment March 20.
Banks and insurance companies were among the beneficiaries of the better investment mood. Hong Kong-listed Ping An Insurance soared 7 percent and China Life Insurance Co. Ltd. rose 2.8 percent. China Construction Bank added 2.5 percent. South Korea's Shinhan Financial Group added 2 percent.
Australia's Lynas Corp. Ltd. soared 8.5 percent amid speculation that the rare earths miner will be cleared to proceed with its Malaysian project by officials later this month.
Benchmark oil for February delivery was up 69 cents to $101.28 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 12 cents to $100.59 per barrel on the Nymex on Wednesday.
In currencies, the euro rose to $1.2884 from $1.2841 late Wednesday in New York. The dollar fell to 76.75 yen from 76.80 yen.
Source: Associated Press
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