China Economy Hopes Give Lift to World Markets Thursday
Updated from 9:34 a.m. EST with closing European market data.
By Pan Pylas, AP Business Writer
LONDON -- An upbeat Chinese manufacturing survey helped offset the disappointment felt in the markets of another round of grim European figures Thursday -- on a day that saw trading seriously curtailed by the U.S. Thanksgiving holiday.
The optimism in the markets came in the wake of a manufacturing survey from HSBC. Its purchasing managers index (PMI), a gauge of activity, rose to a 13-month high of 50.4 for November from the previous month's 49.5. Readings above 50 denote growth.The figures gave Asian markets a boost earlier, and that carried through into the European day. The FTSE 100 index of leading British shares closed up 0.7% at 5,791.03 while Germany's DAX rose 0.8% to 7,244.99. The CAC-40 in France ended 0.6% higher at 3,498.22. The gains in Europe came despite a survey showing that the 17-country eurozone remains in recession. Financial information company Markit said its composite PMI, which assesses the service sector as well as manufacturing, for the eurozone rose to 45.8 in November from 45.7 the month before. That signals further contraction in the eurozone economy, which is now in recession, officially defined as two straight quarters of negative growth. "The eurozone might be drifting further into recession, but it seems markets are content to ignore this and focus on figures which suggest that the situation in the global powers of the U.S. and China is improving," said Chris Beauchamp, market analyst at IG Index. Over recent weeks, the focus of attention has been on two main issues -- whether the White House can come to a deal with Congress on the budget and whether Greece will get its next batch of bailout cash. Though a deal on either front has yet to be achieved, investors remain confident that their worst fears -- a U.S. recession and a Greek exit from the euro -- will be averted. A U.S. budget deal is expected to be achieved to avoid automatic tax increases and spending cuts at the start of next year, while Greece is tipped to finally get the approval for the release of the money it needs to avoid bankruptcy at a meeting in Brussels on Monday. That confidence has boosted stocks this week as well as given the euro a boost. Europe's single currency was up a further 0.2% at $1.2871. Earlier, Asian markets registered strong gains, boosted by the manufacturing news from China, a major market for many countries in the region. Hong Kong's Hang Seng rose 1% to close at 21,743.20. South Korea's Kospi added 0.8% to 1,899.50 and Australia's S&P/ASX 200 gained 1% to 4,424.20. Japan's Nikkei 225 index jumped 1.6% to close at 9,366.80 -- its highest finish since May 2 -- as a recently weakened yen provided a vital boost to the export-heavy index. The yen continued to fall back Thursday, with the dollar up 0.2% at 82.62 yen. Oil prices were little changed as traders weighed up Thursday's economic figures as well as the cease-fire in Gaza. Benchmark crude for January delivery was down 21 cents at $87.17 per barrel in electronic trading on the New York Mercantile Exchange.
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