A passer-by walks past an electronic stock board in downtown Tokyo Friday, Oct. 10, 2008. Japanese shares nose-dived more than 10 percent in morning trade Friday as panicked investors dumped stocks following massive overnight losses on Wall Street and on growing fears over a global recession. The benchmark Nikkei 225 index lost 974.12 points, or 10.64 percent, to close the morning session at 8,183.37. (AP Photo/Itsuo Inouye)
LONDON – World markets were slightly higher Tuesday as investors continued to buy up battered stocks on the back of renewed hopes that governments will enact meaningful fiscal measures to limit the length and depth of the global recession.
In Europe, the FTSE 100 index of leading British shares was 44.78 points, or 1.0 percent, higher at 4,344.84, while Germany's DAX was up 22.03 points to 4,737.91. The CAC-40 in France rose 35.99 points, or 1.1 percent, to 3,283.47.
Earlier in Asia, Japan's benchmark Nikkei 225 stock average climbed 0.8 percent to 8,395.87, but Hong Kong's Hang Seng index fell 1.9 percent to 14,753.22.
Tuesday's moves are muted in comparison to those experienced Monday, when optimism gripped investors around the world after President-elect Barack Obama indicated that his incoming administration will enact one of the biggest fiscal boosts in U.S. history, and China and India looked at new ways at shoring up their economies amid the global economic downturn.
"The specter of stimulus packages across the globe is cause for cheer, but at the same time we've got numbers like last week's non farm payrolls and the latest Japanese GDP readings that emphasize just how deep the recession that we're facing is and with that sort of landscape traders have every reason to be looking cautious," said Matt Buckland, a dealer at CMC Markets.
Japanese figures showed that the world's second biggest economy slumped by a quarterly rate of 0.5 percent in the third quarter of the year, more than the previous estimate of 0.1 percent. The downgrade was primarily a result of a sharp fall in inventories.
Despite the downgrade, Japanese stocks fared moderately well on hopes that lawmakers in the U.S. will approve a package to help Detroit's three automakers. The White House said Monday it was "very likely" to strike an agreement with Congress on funneling money to General Motors Corp., Chrysler LLC and Ford Motor Co.
The renewed hopes over the future of the U.S. automakers helped shares in Nissan Motor Co. and Honda Motor Co. soar 7.6 percent and 6.3 percent respectively.
Despite this week's improved performance, investors are nervous to call the bottom of the market especially with so much bad economic news likely to flow through in the coming months.
Marc Ostwald, a strategist at Monument Securities, said exceptionally thin trading volumes in the run-up to Christmas will likely drive volatility and that stocks may be the most volatile.
"Above all equities are likely to be the key point of focus as many doubt the durability of what appears to be a year end rally, worrying that this may be nothing more than a bear market squeeze," he said.
Wall Street is expected to hold onto Monday's gains at the opening bell later. Dow futures were up 2 points to 8,881, while the broader Standard & Poor's 500 futures were up 0.3 points to 905.
Elsewhere in the Asia-Pacific, the picture was mixed. Key indices in South Korea, New Zealand, Taiwan, Thailand and Singapore all rose, but markets in mainland China and Australia declined.
In China, the benchmark Shanghai Composite Index fell 2.5 percent, falling for the first time in a week on as investors took profits on financial and real estate issues. Investors had bid up prices on hopes that a high-level economic planning meeting this week might produce new measures to spur growth on top of a $586 billion stimulus package announced Nov. 9.
India's market was closed for a holiday.
In currencies, the dollar fell 0.5 percent to 92.41 yen while the euro was 0.6 percent lower at $1.2874.
Oil, meanwhile, was steady at $43.50 a barrel as investors anticipated that OPEC will announce a big production cut next week to stabilize crude prices that have fallen about 70 percent in five months. On Friday, oil prices fell to a four-year low of just above $40 a barrel.