Tuesday, January 31, 2012

World markets rise as investors watch Europe (AP)

BEIJING ? World markets rose Tuesday as traders watched for a possible deal to cut Greece's debts and Japanese factory output rebounded.

Benchmark oil rose above $99 per barrel while the dollar fell against the euro and was unchanged against the yen.

Tokyo's Nikkei 225 rose 0.1 percent to 8,802.51 after data showed December industrial activity rose 4 percent over the previous month. Hong Kong's Hang Seng gained 1.1 percent to 20,383.3 and Seoul's Kospi was up 0.8 percent at 1,955.79.

In Europe, France's CAC-40 added 0.8 percent to 3,292.38, rebounding from a 1.6 percent loss Monday. Germany's DAX gained 0.5 percent to 6,473.96, reversing a 1 percent decline a day earlier. Britain's FTSE 100 rose 0.6 percent to 5,703.94.

Wall Street was also set to open higher, with Dow Jones industrial futures rising 0.4 percent at 12,649 and S&P 500 futures 0.4 percent higher at 1,313.80.

Traders watched Europe following reports Greece and its creditors were close to a deal to cut its debts. Also Monday, European leaders agreed on a new treaty meant to stop overspending and put an end to the region's crippling debt woes.

"Everyone is watching the European summit and how the Greek debt crisis comes out," said Jackson Wong at Tanrich Securities in Hong Kong. "The general atmosphere is to play a wait-and-see game."

China's benchmark Shanghai Composite Index was up 0.3 percent at 2,292.61 ahead of Wednesday's release of a key manufacturing index. Investors are hoping for a loosening of credit curbs if it shows activity is slowing amid lackluster global demand.

India's Sensex gained 1.5 percent to 17,109.30 while Australia's S&P/ASX 200 fell 0.2 percent to 4,262.70. Benchmarks in Taiwan, Thailand, Indonesia and India rose while Singapore and New Zealand fell.

European markets tumbled Monday on concerns Greece's financial problems might not be solved even if creditors agree to cancel part of its debt.

Under a tentative agreement, investors holding 206 billion euros ($272 billion) in Greek bonds would exchange them for bonds with half the face value. The replacement bonds would have a longer maturity and pay a lower interest rate. When the bonds mature, Greece would have to pay its bondholders only 103 billion euros.

Wall Street fell in early trading but Asian investors were encouraged after the Dow Jones industrial average recovered most of its losses to close down just 0.1 percent. The Standard & Poor's 500 lost 0.8 percent.

Borrowing costs for the most indebted European countries shot higher. The two-year interest rate for Portugal's government debt jumped to 21 percent after trading around 14 percent last week.

Portugal may become the next country "where default is a real possibility," said Martin Hennecke of Tyche Group in Hong Kong.

"The euro zone crisis is far from being fixed at all. Italy and Spain are effectively bankrupt as well," Hennecke said. "For Asia, that means there is huge uncertainty in terms of export markets."

The treaty agreed to Monday by all European Union governments except Britain and the Czech Republic includes strict debt brakes and is aimed at making it harder for violators to escape sanctions. The 17 countries in the eurozone hope the tighter rules will restore confidence in their joint currency.

Benchmark oil for March delivery gained 98 cents to $99.76 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 78 cents to end at $98.78 per barrel on the Nymex on Monday.

In currencies, the euro rose to $1.3207 from $1.3114 late Monday in New York. The dollar held steady at 76.25 yen.

Source: http://us.rd.yahoo.com/dailynews/rss/europe/*http%3A//news.yahoo.com/s/ap/20120131/ap_on_re_as/world_markets

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