World stocks gain as jobs report spurs confidence (AP)

March 31, 2011

BANGKOK – World stocks, including equities in earthquake-battered Japan, showed resilience Thursday as investor sentiment perked up on a report that U.S. employers were hiring more workers.

Oil prices rose to near $105 a barrel after control of a key oil port swung back to forces loyal to Libyan leader Moammar Gadhafi, dimming hopes of a quick rebel victory and a restart of crude exports. The dollar was lower against the yen and the euro.

European bourses were mostly higher in early trading. Britain’s FTSE 100 rose 0.2 percent to 5,961.14 and Germany’s DAX was up 0.2 percent to 7,070.62. France’s CAC-40 was down marginally to 4,022.75.

Wall Street was set for a higher opening a day ahead of an important report on U.S. employment. Dow Jones industrial futures rose 0.1 percent to 12,300 and S&P 500 futures were 0.1 percent higher to 1,325.10.

In the U.S. on Wednesday, the ADP National Employment Report said 201,000 new private sector jobs were added in March, roughly in line with expectations. Investors were encouraged by a strong gain in small business hiring. The ADP report is seen as a precursor to the government’s crucial March payrolls report due Friday.

Tokyo’s Nikkei 225 index rose 0.5 percent to 9,755.10, its highest close since March 11, when a massive earthquake and tsunami devastated Japan’s industrial northeast and took down a nuclear plant that has leaked toxic radiation ever since.

Hong Kong’s Hang Seng added 0.3 percent to 23,527.52 as numerous Chinese companies posted earnings growth.

South Korea’s Kospi was 0.2 percent higher to 2,096.30. Benchmarks in Singapore, Australia and New Zealand also gained as investors began to look beyond the shocks around the globe — political upheaval in the Arab world, the disaster in Japan and the chronic debt crisis in Europe.

“Having ground out a double-digit return in 2010, global equities will do the same in 2011, we believe,” Citigroup Global Markets said in a report. “The recent rally has brought global equities back into line with previous experience, but they are not yet in overshoot territory.”

Mainland China’s Shanghai Composite fell 0.9 percent to 2,928.11 in anticipation of further rate hikes by China’s central bank. Beijing has been using a series of repeated, gradual hikes in interest rates and reserve levels to stanch a flood of lending that helped China rebound quickly from the global crisis but now is fueling pressure for prices to rise.

Peng Yunliang, a Shanghai-based analyst, said new consumer price data from China was expected to show inflation still on the March.

“The consumer price index will come out soon and will be at or higher than 5 percent, higher than 4.9 percent in last two months,” Peng said. “That’s why there might be an interest rate hike in the near future.”

For weeks, traders have focused on the human and economic toll exacted by Japan’s devastating earthquake and tsunami, uprisings in the Arab world and their effects on oil prices, and European debt problems as Portugal moves closer to needing a bailout.

Now, however, traders seemed to be turning their attention toward fundamental economic trends.

Among the most important are the pace of jobs creation in the U.S. and when the Federal Reserve will start raising interest rates from super-low levels.

The most important piece of economic data this week will be Friday’s U.S. nonfarm payrolls report for March. The figures often set the stock market tone for a week or two after their release. They could have an even bigger impact this time as investors gauge when the Fed will begin tightening monetary policy.

Recent comments from Fed officials have indicated that interest rates may rise sooner than the markets had previously been anticipating.

“What is interesting, however, is that whilst the market is expecting an end to excess liquidity, it is continuing to rally. It seems the fact the Fed see the economy as strong enough to stand on its own two feet without assistance is sending a positive message to the market,” said Ben Potter of IG Markets in Melbourne.

In New York on Wednesday, telecommunications companies led a broad stock rally following the ADP employment report. The Dow gained 0.6 percent to 12,350.61. The S&P index rose 0.7 percent to 1,328.26. The Nasdaq composite rose 0.7 percent to 2,776.79.

Benchmark crude for May delivery was up 72 cents to $104.97 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 52 cents to settle at $104.27 on Wednesday.

The U.S. dollar dropped to 82.75 yen from 82.89 yen late Wednesday in New York, where it hit its highest level in almost three weeks. The euro rose to $1.4199 from $1.4121.

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