Thursday April 9, 10:46 AM
World stocks win back ground before Easter break
LONDON (AFP) - World stock markets advanced Thursday, with Asia boosted by a record new stimulus package in Japan and Europe lifted by overnight US gains before a British interest rate call and the Easter break.
Tokyo jumped 3.74 percent after the Japan's ruling party approved a stimulus spending plan that amounts to more than 15.4 trillion yen (154 billion dollars), or about three percent of gross domestic product.
Hong Kong rallied 2.97 percent, Sydney gained 1.44 percent and Seoul closed 4.3 percent higher. Shanghai closed up 1.38 percent on bargain hunting.
The injection for Japan, the world's second largest economy, would be part of a wider package worth over 56.8 trillion yen when tax cuts, loan guarantees and other measures are included.
The markets also took their lead from Wall Street. New York rose 0.61 percent Wednesday after two days of declines as investors appeared to hedge against a tough corporate earnings reporting season.
The positive sentiment spilled over into Europe, where London gained 0.74 percent and Paris added 0.78 percent in late morning trade.
"European equity markets are set to start the final session of this shortened trading week on an upbeat note after Wall Street finished in positive territory," said Jimmy Yates, head of equities at CMC Markets.
Frankfurt was up 0.96 percent, winning an additional boost after the German government launched a takeover of troubled Hypo Real Estate bank.
However, trading was expected to be muted because all three main European markets will be shut on Friday and Monday for a four-day Easter holiday weekend.
"With a long Easter weekend on the horizon, the markets are likely to be thin today, as many participants pack up early," said Calyon analyst Stuart Bennett.
London investors awaited an interest rate decision later Thursday from the Bank of England (BoE), which was expected by analysts to keep its key lending rate at the current record low of 0.50 percent.
The central bank last month launched a twin-pronged attack on the global credit crunch by creating 75 billion pounds of new money under a quantitative easing plan and slashing borrowing costs to 0.50 percent.
"The significant item today is the (BoE) meeting and again here the focus will be on the success of the quantitative easing that we've seen so far and also what the bank is planning to do next," Yates said.
"We may be starting to turn a corner in the economic crisis but there's still a long way to go before confidence is fully resurrected."
Hopes that the global economic picture would improve soon were dealt a blow after the Federal Reserve warned Wednesday that the United States would endure a prolonged recession and grow at a slow pace in 2010.
The gains Thursday follow two days of volatile swings as recent confidence began to wane on fears of a poor corporate earnings season, which started with aluminium giant Alcoa posting a net loss of 497 million dollars.
World stock markets were mixed Wednesday, with investors hesitant to take fresh positions as they set continued bad data against the possibility that the global slump could be easing.
Analysts cautioned that next week's key earnings reports could spell more bad news for equities -- and for the troubled global economy.
"Whilst equity markets held up, with Asian markets bolstered by the prospect of another Japanese stimulus package, the prospect of a series of nerve jangling first quarter earnings figures, starting with Goldman Sachs, Johnson & Johnson and Intel on Tuesday, look set to keep all markets on red alert," Bennett said.
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