Traders work on the floor of the New York Stock Exchange Monday, May 17, 2010.
(AP Photo/Richard Drew)
LONDON—World stock markets mostly rose Tuesday as fears surrounding Europe's debt crisis subsided somewhat as EU finance ministers in Brussels discussed tougher rules on government spending. The euro also won some much-needed respite after falling to a four-year low against the dollar earlier in the week.
In Europe, the FTSE 100 index of leading British shares was up 75.76 points, or 1.4 percent, at 5,338.30 while Germany's DAX rose 110.33 points, or 1.8 percent, to 6,177.25. France's CAC-40 was 83.38 points, or 2.4 percent, higher at 3,626.93.
Meanwhile on Wall Street, the Dow Jones industrial average was up 77.69 points, or 0.7 percent, at 10,703.52 soon after the open while the broader Standard & Poor's 500 index rose 10.41 points, or 0.9 percent, at 1,147.35.
But as has been the case over the last few weeks, Europe's debt crisis is never too far from the minds of investors, even though Greece confirmed it will be receiving euro14.5 billion in bailout loans from 10 other European Union countries just a day before a crucial debt refinancing deadline that threatened the country with default.
"As yet this week's consolidation has done nothing to alter the bearish overall trend," said Jane Foley, research director at Forex.com.
"A healthy trend can be expected to be laced with periods when profits are taken and extremes in sentiment are shaken out," Foley added.
Investors are keeping a close eye on developments in Brussels as the finance ministers from the 27 country EU gather.
EU Economy Commissioner Olli Rehn told reporters Tuesday that finance ministers would negotiate tougher budget rules because "it is now very important to reinforce confidence in the euro economy."
Market worries about Europe's economy have helped fuel the euro's fall to its lowest level against the dollar since April 2006 and lifted the price of gold, traditionally a safe haven when markets lose faith in other assets.
Some stability has emerged with regard to the euro, which was up 0.2 percent on the day at $1.2415, having fallen Monday to a four-year low of $1.2237.
Neil Mackinnon, global macro strategist at VTB Capital, said stock markets will continue to take their lead from the performance of the euro.
"Any fresh slide in the euro will trigger fresh setback in risk assets," said Mackinnon.
Another currency in focus is the British pound, which has continued to fall even after the new coalition government paved the way for immediate spending cuts as a means of getting the country's budget deficit down.
Figures earlier showing that consumer prices rose by an 18-month high of 3.7 percent in the year to April have done nothing to ease fears about the state of the British economy, even though it may mean that the Bank of England ends up having to raise borrowing costs sooner than most in the markets have been predicting.
By mid-afternoon London time, the pound was 0.1 percent lower at $1.4480.
Earlier in Asia, the Shanghai Composite index jumped 1.4 percent to 2,594.78, bouncing back from losses earlier in the session. Hong Kong's Hang Seng index gained 1.2 percent to 19,944.94 while Seoul's Kospi slipped 0.5 percent to 1,643.24.
Japan's Nikkei 225 stock average rose 0.1 percent to 10,242.64, recovering slightly after shedding more than 2 percent the previous day. Benchmarks in Singapore, India and Thailand also advanced.
Benchmark crude for June delivery was up $2.19 to $72.27 a barrel in electronic trading on the New York Mercantile Exchange. The June contract dropped $1.53, or 2.1 percent, to $70.08, a three-month low.
--------
Associated Press Writer Alex Kennedy in Singapore contributed to this report.
© Copyright 2010 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
