Global stocks rise on rate hopes, Beijing stimulus
Stock markets rose Friday as slowing US and European inflation raised hopes of more aggressive interest rate cuts and China took measures to boost its struggling economy.
All three major New York indexes were up after opening, and all major European markets were also higher in mid-afternoon as they approached the end of a strong week for equities.
Earlier, the Hong Kong and Shanghai stock markets finished the week more than 10 percent higher, with the latter index seeing its strongest weekly gain since 2008.
The core Personal Consumption Expenditures (PCE) index, which strips out volatile food and energy costs and is closely watched by the US Federal Reserve, rose 0.1 percent in August from the previous month.
It was below analyst expectations that the rate would stay unchanged from July's 0.2 percent.
US "inflation seems to be on a sustained path lower", said Bret Kenwell, US investment analyst at eToro trading platform.
For the Federal Reserve, he said, "it makes sense to turn their focus to the labour market, which has shown softness in recent months."
The Fed cut its main lending rates by 50 basis points earlier this month -- after four years of tight money policies -- and analysts expect further cuts at the next policy making meeting in November.
Annual inflation slowed sharply in France and Spain in September, official data showed on Friday, fuelling speculation the European Central Bank (ECB) could also cut rates more aggressively than once expected.
Meanwhile, in the latest in a slew of stimulus measures, Chinese officials on Friday said they had cut the amount of cash banks must hold in reserve in a bid to encourage lending -- a move that would pump more than $140 billion into financial markets.
A Bloomberg report Thursday said Beijing may pump a similar amount into the country's large state-run banks in the first such move of support since the global financial crisis.
"The stimulus is aimed at shoring up China's economy which has been seriously damaged by a protracted slump in its property market," said David Morrison, analyst at Trade Nation.
"The hope is that these moves will help boost investor confidence, and lead to a sustained turnaround. It's certainly working in the short-term."
Besides expectations of lower rates, Europe's main stock markets were boosted by hopes of rebounding Chinese demand, especially for luxury products and cars.
In Frankfurt, BASF soared 6.6 percent after the German chemicals giant Thursday unveiled a major overhaul to focus on cost cutting and strengthening its core businesses.
In Paris, Ubisoft shares jumped 7.3 percent after Credit Agricole raised its stake to 11 percent -- making it the game company's largest shareholder -- and said it could buy more.
In foreign exchange, the yen rallied against the dollar after Japan's ruling party elected a new leader, Shigeru Ishiba, who backs interest-rate hikes. The dollar was little changed against the euro.
Oil prices were slightly lower after suffering some heavy losses this week on expectations of higher output from some key producers.
- Key figures around 1340 GMT -
New York - Dow: UP 0.5 percent at 42,337.61 points
New York - S&P 500: UP 0.2 percent at 5,754.80
New York - Nasdaq Composite: UP 0.1 percent at 18,200.18
London - FTSE 100: UP 0.2 percent at 8,298.73
Paris - CAC 40: UP 0.5 percent at 7,779.16
Frankfurt - DAX: UP 1.1 percent at 19,440.71
Tokyo - Nikkei 225: UP 2.3 percent at 38,829.56 (close)
Hong Kong - Hang Seng Index: UP 3.6 percent at 20,632.30 (close)
Shanghai - Composite: UP 2.9 percent at 3,087.53 (close)
New York - Dow: UP 0.6 percent at 42,175.11
Dollar/yen: DOWN at 142.96 yen from 144.87 yen on Thursday
Euro/dollar: UP at $1.1188 from $1.1174
Pound/dollar: UP at $1.3415 from $1.3412
Euro/pound: UP at 83.40 pence from 83.31 pence
Brent North Sea Crude: DOWN 0.3 percent at $71.37 per barrel
West Texas Intermediate: DOWN 0.1 percent at $67.69 per barrel
Ch.Schroeder--RTC
