A man walks past an electronic stock indicator in central Tokyo Monday, Nov. 2, 2009. Japan's benchmark Nikkei stock average shed 272.08 points, or 2.71 percent, from Friday to 9,762.66, to wrap up the morning session.
(AP Photo/Koji Sasahara)
European, US stocks up on manufacturing optimism
A man walks past an electronic stock indicator in central Tokyo Monday, Nov. 2, 2009. Japan's benchmark Nikkei stock average shed 272.08 points, or 2.71 percent, from Friday to 9,762.66, to wrap up the morning session.
(AP Photo/Koji Sasahara)
LONDON—European and U.S. stock markets rose Monday after a much better than anticipated U.S. manufacturing survey helped ease concerns that the recovery in the world's largest economy was faltering.
In Europe, Britain's FTSE 100 index of leading British shares closed up 51.70 points, or 1 percent, at 5,096.25 while Germany's DAX rose 15.86 points, or 0.3 percent, to 5,430.22. The CAC-40 in France was 31.77 points, or 0.9 percent, higher at 3,639.46.
And on Wall Street, the Dow Jones industrial average was 117.22 points, or 1.2 percent, higher at 9,829.65 around midday New York time while the broader Standard & Poor's 500 index rose 10.97 points, or 1.1 percent, to 1,047.16.
Monday's solid performance was largely due to strong U.S. manufacturing data from the Institute for Supply Management. The trade group of purchasing executives said the sector grew at its fastest pace in more than three years in October.
Its main index read 55.7 last month from 52.6 in September. It's the third straight reading above 50, which indicates growth, and was way more than the 53 predicted by economists.
"This has provided some comfort to investors following the sharp slides seen on Friday," said David Jones, chief market strategist at IG Index.
There was also good news in other September data released Monday, with a 6.1 percent rise in pending home sales and a 0.8 percent increase in construction spending.
Monday's rebound on Wall Street means that U.S. stocks have recouped around half the losses they posted last Friday when investors were spooked by government figures showing U.S. personal spending in September fell 0.5 percent from the previous month -- the Dow and the S&P both suffered their worst day since early July.
Earlier, sentiment in Europe had been buoyed by equally robust manufacturing surveys.
The monthly purchasing managers index -- a broad gauge of business activity -- for the 16-country euro area rose to 50.7 from September's 49.3. Any reading above 50 indicates that the sector is growing.
Meanwhile, the equivalent British PMI for October spiked to 53.7 from 49.9 in September. October's reading represented the fastest pace of growth since November 2007.
Monday's gains in Europe and the U.S. come despite news that commercial lender
Economic matters will be at the forefront of traders' attention this week. In particular, they will be looking to see what the U.S. Federal Reserve, the European Central Bank and the Bank of England say about the world economy when they announce their latest interest rate decisions.
Though all three banks are expected to keep their benchmark rates at historic lows, investors will be focusing on what they say about economic prospects and when extraordinary measures to boost the world economy will start to be unwound. The Bank of England is the only one that may well change current policy, with most analysts now predicting that it will increase the amount of money it pumps into the economy.
And the week ends with the closely-watched U.S. nonfarm payrolls report for October, which often sets the stock market tone for a week or two.
With all these big economic events ahead, Keith Bowman, an equities strategist at Hargreaves Lansdown in London, reckons that it could well end up being an "exceptionally volatile" week in stock markets.
Earlier, Japan's key Nikkei 225 stock average led Asian declines, down 231.79, or 2.3 percent, at 9,802.95. Hong Kong's Hang Seng index lost 132.68, or 0.6 percent, to 21,620.19 while Australia's S&P/ASX 200 was down 2.2 percent. South Korea's market dropped 1.4 percent.
Benchmarks in New Zealand, Taiwan and Singapore also fell, though the region recovered some early losses on strength in mainland China. The Shanghai Composite index was the only major market in positive territory, up 2.7 percent on stronger manufacturing figures and higher bank earnings.
Oil prices bounced back, with benchmark crude for December delivery up 90 cents to $77.99 a barrel. The contract dropped $2.87 to settle at $77.00 on Friday.
The dollar rose 1 percent to 90.53 yen while the euro firmed 0.7 percent to $1.4824.
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Associated Press Writer Tomoko A. Hosaka in Tokyo contributed to this report.
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