BANGKOK (AP) â¿¿ World stock markets rose Friday after Spain announced severe budget cuts meant to show international lenders and investors that the country is taking steps toward getting its debt under control.
The Spanish government on Thursday unveiled a draft budget for 2013 that cuts overall spending by â¿¬40 billion ($51 billion). Wall Street spurted higher on the news. Many economists see the cost-cutting as a signal Spain is preparing to request financial aid from other governments and the European Central Bank.
Spain, whose banks have been hobbled by toxic assets, has so far been reluctant to ask for help because stiff conditions will likely be imposed in exchange for any aid.European stocks rose in early trading. Britain's FTSE 100 gained 0.3 percent to 5,797.35. Germany's DAX added 0.5 percent to 7,322.85. France's CAC-40 advanced 0.2 percent to 3,446.37. Wall Street headed for a flat open, with Dow Jones industrial futures nearly unchanged at 13,412 and S&P 500 futures barely budging at 1,441.20. In Asia, stocks were also helped by speculation that China's central bank will act soon to help the world's No. 2 economy. Lorraine Tan, director at Standard & Poor's equity research in Singapore, said she believes the Chinese government is likely to introduce incentives to encourage domestic spending rather than making more money available for loans, as the U.S. Federal Reserve has done under its quantitative easing programs. "Banks are indicating that they are not finding takers for loans," Tan said. "The Chinese have a lot of flexibility ... the question is, they will only act on it if they think it will achieve something." Hong Kong's Hang Seng Index rose 0.4 percent to 20,840.38. South Korea's Kospi added nearly 0.4 percent to 1,996.21 and Australia's S&P/ASX 200 advanced slightly to 4,387. Benchmarks in Singapore, Taiwan, Thailand and the Philippines also rose.