Monday March 16, 12:03 PM
World stocks rally but analysts doubt it can last
LONDON (AFP) - Leading European and Asian stock markets rose sharply Monday on tentative signs of economic recovery, but analysts said the good times were likely to be short-lived.
Japanese shares ended at a one-month high, mirroring strong gains Friday on Wall Street. There were meanwhile large gains for indices in Hong Kong, Shanghai and Mumbai.
Wall Street last week enjoyed a stunning comeback from 12-year lows, while G20 finance ministers vowed Saturday to take "whatever action is necessary" on the world economic slowdown.
In morning European trade, London's FTSE 100 index jumped 1.87 percent to 3,823.69 points, Frankfurt's DAX 30 (Xetra: news) won 2.20 percent to 4,040.69 points and in Paris the CAC 30 advanced 2.57 percent to 2,775.29.
"It will take better news on the economic and/or financial front for the more optimistic tone to be sustained," said Calyon analyst Mitul Kotecha.
"Data releases this week are likely to continue to paint a downbeat picture of the global economy and whilst some banks have announced a positive start to the year, there is a long way to go and a lot of toxic debt to clear off balance sheets before a clean bill of health can be given."
In London on Monday, the share price of Barclays bank (NYSE: BCS-P - news) soared 21.19 percent to 81.80 pence after the British group said it was in talks over the sale of its asset management business iShares and was negotiating with the British government on a plan to provide guarantees for risky assets.
Reports said the sale could raise four billion pounds (4.4 billion euros, 5.6 billion dollars).
"The sale talks are somewhat of a surprise as management had indicated this business as being core to (the) group for several years now," said Collins Stewart (LSE: CLST.L - news) analyst Alex Potter.
"However, tough markets evidently lead to tough decisions being taken."
In Tokyo meanwhile, the market rebounded for a second straight day after US Federal Reserve chairman Ben Bernanke said America had averted another Great Depression and was already seeing the "green shoots" of economic recovery.
The "green shoots" of economic revival are already evident, Bernanke told CBS (NYSE: RBV - news) programme "60 Minutes" in the interview broadcast late Sunday.
Tokyo's Nikkei (news) -225 index climbed 1.78 percent to end Monday at 7,704.15 points -- the highest close since February 16. It had surged more than five percent on Friday.
"The market is still fragile, so we shouldn't be overly optimistic," Investrust chief executive officer Hiroyuki Fukunaga told Dow Jones Newswires.
Monday's gains "were not based on economic recovery, but merely optimism," Fukunaga said.
Investors welcomed Finance Minister Kaoru Yosano's remarks at the Group of 20 meeting of finance chiefs in Britain over the weekend that Japan's fiscal stimulus measures would exceed two percent of gross domestic product.
Dealers said his pledge to ease financing pressures on companies ahead of the financial year to March gave a boost to struggling lenders such as Shinsei Bank (Berlin: LCJ.BE - news) , which leapt 17 percent to 95 yen.
Elsewhere in Asia on Monday, Hong Kong share prices closed 3.6 percent higher, Shanghai won 1.15 percent, Mumbai jumped 2.13 percent.
Sydney edged up 0.1 percent as gains across the banking sector offset losses among resources firms, dealers said.
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