European Stocks Recover as Dow Futures turn Higher

By: AP
By: AP
European stocks recouped most of their early losses Thursday on expectations U.S. markets will open higher despite concerns the U.S. Senate may block the bill to rescue Detroit

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 – European stocks recouped most of their early losses Thursday on expectations U.S. markets will open higher despite concerns the U.S. Senate may block the bill to rescue Detroit's carmakers.

The FTSE 100 index of leading British shares was up 20.66 points, or 0.5 percent, at 4,389.94, while Germany's DAX was 7.55 points, or 0.2 percent, lower at 4,797.33. The CAC-40 in France fell 2.74 points, or 0.1 percent, to 3,317.57. Earlier all three indexes had been trading significantly lower.

Earlier, Japan's benchmark Nikkei 225 stock average closed 0.7 percent higher at 8,720.55 and Hong Kong's Hang Seng edged up 0.2 percent to 15,613.90, but gains were limited by caution over the U.S. vote on the auto sector bailout.

"Sentiment is somewhat fragile especially with the auto bailout bill not yet fully passed," said Hans Redeker, an analyst at BNP Paribas.

Though a $14 billion package to help Detroit's Big Three automakers has been passed by the House of Representatives, there are concerns that Republican opposition could derail the bill in the Senate. Republicans are challenging lame-duck President George W. Bush and House Democrats on the proposal, arguing that any support for the domestic auto industry should carry significant concessions from autoworkers and creditors.

Markets will likely be eyeing up developments in the U.S. for direction.

Indications are that Wall Street will open modestly higher following Wednesday's late rally, which saw the Dow Jones industrial average end up 0.8 percent higher at 8,761.42.

Dow futures were up 34 points, or 0.4 percent, at 8,749 while the broader Standard & Poor's 500 futures were 2.30 points, or 0.3 percent, higher at 898.10. Both indexes were projected to open lower earlier in the European session.

Confidence remains shaky, though, due to concerns about the global economy.

That was underscored by the warning Thursday from a leading German research institute that Europe's largest economy will remain in recession until 2010.

The Ifo Institute also said German gross domestic product will likely shrink 2.2 percent next year as the global economic crisis deepens.

In Asia, markets were further weighed by the news that China, the world's fourth biggest economy, saw its exports fall in November for the first time in seven years, prompting some investors to cash in on recent gains.

"The gloom in the global economy took a major step further, with the release of Chinese trade data for November which indicated that the economy is slowing more quickly than many had expected," said Mitul Kotecha, an analyst at Calyon Credit Agricole.

The benchmark Shanghai Composite Index fell 2.3 percent, or 47.44 points, to 2,031.68 after Chinese leaders ended a top level economic policy meeting without announcing any fresh initiatives to spur growth.

Elsewhere in Asia, South Korea's Kospi gained 0.8 percent to 1,154.43 after the central bank carried out its biggest interest rate cut ever, slashing a key rate by a full percentage point to a record low of 3 percent.

But markets in Australia, China, Singapore and India fell.

Oil prices pushed higher on hope for a significant OPEC production cut next week. Light, sweet crude for January delivery was up $1.46 to $44.98 a barrel in electronic trading on the New York Mercantile Exchange.

In currencies, the dollar was 0.6 percent lower at 92.07 yen while the euro was 1.2 percent higher at $1.3175.


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