Stock markets rebound on reassurance of Fed official

AP and AFP

HONG KONG — World stock markets mostly rebounded Friday after a fall in U.S. unemployment applications and comments from a U.S. Federal Reserve official eased nerves about a stalling economic recovery.

After sharp falls earlier this week, European markets shot higher, continuing a pattern of highly volatile trading. France’s CAC 40 was up 1.8 percent at 3,987.49 and Germany’s DAX jumped 1.7 percent to 8,726.63. Britain’s FTSE 100 climbed 0.9 percent to 6,252.56. Futures augured gains on Wall Street. Dow futures surged 1 percent to 16,180 and S&P 500 futures were up 1.2 percent to 1,872.60.

��Large daily moves are a good reminder to investors that the superior long term gains in shares are accompanied by higher risk,�� said Michael McCarthy, chief market strategist at CMC in Sydney. ��This week’s moves have largely ignored data. However, GDP estimates in Europe and housing numbers in the U.S. (later Friday) speak directly to recent market concerns around growth. Next week, the other major economy, China, will report industrial production and retail sales to round out the global picture.��

Remarks from St. Louis Fed President James Bullard helped perk up stocks. In an interview with Bloomberg TV, Bullard said that the Federal Reserve should consider putting off winding down its monthly bond purchases this month as planned.

The number of people seeking U.S. unemployment aid dropped to the lowest level in 14 years last week, the latest signal that companies are cutting few workers and hiring could pick up. That reinforced confidence in the U.S. economic recovery at a time when Europe and Japan are struggling.

Analysts have said investors fear Athens will not be able to stand on its own two feet if it goes ahead with the plan, with the country’s main stock market plunging and borrowing costs rising. The issue has stirred memories of the dark days of the eurozone debt crisis that sent global markets spiraling downwards and fanned talk of a break-up of the economic bloc. Most Asian markets were mixed Friday. Tokyo reversed a morning advance to end 1.40 percent lower, with exporters hit by the stronger yen. The Nikkei fell 205.87 points to 14,532.51, a five-month low. Seoul sank 0.95 percent, or 18.17 points, to 1,900.66 and Shanghai closed 0.65 percent lower, giving up 15.32 points to 2,341.18. However, Sydney rose 0.32 percent, or 16.8 points, to 5,271.7 and Hong Kong rose 0.53 percent, or 122.27 points to 23,023.21. Shares around the world have been hammered in recent weeks by worries about the global economy as the eurozone, China and Japan struggle to reignite growth. Those fears increased this week when the United States, which has been the only economy showing signs of strength, came in well below expectations. Gold was at US$1,236.20 an ounce against US$1,241.90 late Thursday.