Wall Street rally extends to Europe and Asia as Japan bounces back
LONDON -- World stock markets rose Wednesday after a big U.S rally, with Asian markets advancing strongly and major European indexes trending upward.
Japanese shares broke an eight-day losing streak, and benchmark indices in China, Hong Kong and India surged almost 5 percent
Driving some of the gains were easing concerns about the credit market and outlook for the U.S. economy.
Japan's Nikkei 225 stock index rose 2.5 percent to 15,499.6 points, bouncing back from a 16-month low hit the previous day. Financial shares led the advance after the Dow Jones industrial average gained 2.5 percent in New York Wednesday.
In the U.K., the FTSE 100 Index rose 0.5 percent to 6,396.10, while in Germany the DAX added 0.03 percent to 7,780.93. France's CAC 40 climbed 1 percent to 5,596.11.
"We have a situation where the market is very uneven," said Gerhard Schwarz, head of global equity strategy at UniCredit Markets. However, "so far, indicators suggest that a severe economic slowdown is not really on the cards."
The Bank of England signaled on Wednesday that interest rates will need to fall in the coming months if it is to meet its inflation target over the next two years.
HSBC Holdings rose 3.2 percent in London after saying third-quarter pretax profit exceeded last year's profit due to strong growth in Asia and the Middle East -- even after having to take a $3.4 billion charge tied to loan losses in its U.S. consumer-finance business.
"We are advising investors not to be heavily underweight the banking sector as there is the rising chance for technical relief rallies," Schwarz said. "However it's hard to really make a case for the banking sector outperforming the rest of the market, as write-offs will be a burden on profits."
Asian exporters like Toyota Motor Corp. also climbed as the dollar recovered somewhat against the yen.
In Hong Kong, China's biggest mobile operator China Mobile shot up 9.2 percent on news it was in talks with Apple Inc. about bringing the iPhone to China. The territory's blue-chip Hang Seng Index soared 4.9 percent to 29,166.01.
On the Chinese mainland, the Shanghai Composite Index rose 4.9 percent to 5,412.7, ending a four-day losing streak. It was the index's largest one-day percentage gain in about three months.
Strong gains in Hong Kong and Taiwan stocks fueled bargain-hunting in China, though traders said apprehension over a possible interest rate hike will likely limit further gains.
"The stock markets were in need of a technical rebound anyway after having fallen sharply recently. The rally in Hong Kong tracking Wall Street's gains overnight gave mainland investors an excuse to buy," said Zhang Gang, an analyst at Central China Securities.
Both Aluminum Corp. of China and Jiangxi Copper hit the 10 percent upside limit after having slumped 30 percent since the beginning of this month.
The regional rally extended also to India, where the Bombay Stock Exchange's benchmark index surged 4.7 percent to close at 19,929 points.