European markets higher ahead of Wall Street open

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LONDON – Europe's stock markets rose modestly Monday ahead of an expected steady opening on Wall Street, with investors sitting tight ahead of a raft of U.S. economic news and Tuesday's presidential election.

The FTSE 100 index of leading British shares was 17.93 points, or 0.4 percent, higher at 4,395.27, with mining stocks doing particularly well on higher commodity prices. BHP Billiton PLC and Anglo American PLC were up 3.4 percent and 3.1 percent respectively.

France's CAC-40 was 15.06 points, or 0.4 percent, higher at 3,502.13, with bank Societe Generale up 2.0 percent after it reported in-line third quarter profit and said it was strong enough "to weather a potential deterioration in the economic environment of 2009."

Germany's DAX was the best performing major European index, up 48.72 points, or 1.0 percent, at 5,036.69, boosted by a 3.7 percent rise in Deutsche Bank AG, which said it is strong enough not to ask for funds from the German government's 500 billion euro ($637 billion) rescue package.

In the U.S. shares are expected to open largely unchanged following Friday's late surge with investors awaiting key reports on manufacturing activity, construction spending and auto sales.

"There's nothing to hang onto to push stocks up or down," said Howard Wheeldon, a senior strategist at BGC Partners.

Dow futures rose 6, or 0.1 percent, to 9,304. Standard & Poor's 500 index futures were unchanged while Nasdaq 100 index futures rose 1.50, or 0.11 percent, to 1,338.50.

The data later could act as a trigger for some movement, though BGC's Wheeldon said there's usually a "lull in proceedings in the 48 hours" preceding U.S. elections.

The Institute for Supply Management is expected to report that the manufacturing sector contracted in October faster than it did in September, while the Commerce Department is expected to report that construction spending dropped 0.8 percent in September following a flat reading for August, according to economists surveyed by Thomson/IFR.

Analysts are also anticipating extremely weak vehicle sales figures from the auto industry for October — even more anemic than in September, when automakers said fewer than 1 million vehicles were sold for the first time in 15 years.

In addition, the markets will have further U.S. economic data to digest this week, most notably Friday's October jobs report, Tuesday's presidential election and interest rate decisions from the European Central Bank and the Bank of England. Both banks are expected to reduce their benchmark rates by a half-percentage point to 3.25 percent and 4.00 percent respectively but there is rising speculation that the Bank of England may decide to cut by a full percentage point.

"The coming week could not be richer in economic data, central bank and political events, and while it is to be hoped that a new month might introduce a 'clean sheet' element to proceedings, the fact remains that the world financial system remains on life support," said Marc Ostwald, an analyst at Monument Securities.

Europe's gains follow Asia's advances overnight, though Japan was closed for a public holiday.

Hong Kong's blue-chip Hang Seng Index climbed 375.70, or 2.7 percent, to 14,344.37 but closed well off its session highs, while South Korea's main stock market added 1.4 percent after the government unveiled nearly $11 billion in new spending measures to prevent the economy from sliding into recession.

In Australia, the S&P/ASX 200 closed up more than 5 percent — its best performance in almost two weeks — despite troubling evidence of slowing manufacturing and retail sales, as traders anticipated a further interest rate cut from the country's central bank on Tuesday.

India's main stock index rose 3.5 percent after a central bank decision over the weekend to cut the nation's key interest rate and release $8.1 billion into its financial system.

Shanghai's benchmark, though, erased early gains to trade in negative territory amid reports suggesting Chinese manufacturing, the engine behind the country's phenomenal growth, was contracting. The index closed down 0.5 percent.

Elsewhere, lingering worries over the health of the global economy pushed oil prices lower Monday, as traders ignored advancing stock markets and focused on fears of slipping demand.

Light, sweet crude for December delivery traded as high as $69.19 before falling back. By noon in Europe it was down 92 cents at $66.89 a barrel in electronic trading on the New York Mercantile Exchange.

On the currency front, the dollar was up 0.6 percent at 99.09 yen, while the euro was up 0.8 percent at $1.2838.


AP Business Writers Madlen Read in New York and Jeremiah Marquez in Hong Kong contributed to this report.