LONDON: World stock markets rose Friday despite further grim economic news, though trading volumes remained light with many traders not back at their desks until next week.
The FTSE 100 index of leading British shares was up 75.19 points, or 1.7 percent, at 4,509.36, while Germany s DAX was 104.21, or 2.2 percent, higher at 4,914.41. France s CAC-40 rose 69.21 points, or 2.2 percent, to 3,287.18.
Earlier, Hong Kong s Hang Seng Index led what Asian markets were open higher, vaulting 655.33 points, or 4.6 percent, to 15,042.81. More than half of Asian s markets, including Japan s Nikkei, remained closed.
With most investors away for the holidays and more than half of Asia s markets still closed, trading volumes were extremely light, which exaggerates price moves. Chinese telecom firms surged after Beijing approved next-generation mobile licenses, and commodity companies were lifted by stronger prices for raw materials.
The relatively perky New Year s tone ran through into the US where the Dow Jones industrial average futures was up 101.40 points, or 1.2 percent, at 8,877.79 while the broader Standard & Poor s 500 index rose 9.12 points, or 1 percent, to 912.37.
The gains on Wall Street came despite further dismal US manufacturing data. The Institute for Supply Management, a trade group of purchasing executives, said Friday its manufacturing index fell to a 28-year low of 32.4 in December from 36.2 in November. Any reading below 50 indicates contraction and the bigger the difference from 50 the greater the contraction.
Many analysts found little reason to be optimistic about the world economy as a whole. After one of the worst years ever for global equities, many expect more volatility in the first half as the effects of falling exports and higher capital costs start showing up on company balance sheets.
There will be trading opportunities, but I don t think we ve hit the bottom yet, said John Mar, co-head of sales trading at Daiwa Securities SMBC Co. in Hong Kong.
We should get more clarity when we see US earnings reports in 2 weeks time, he said. It s pretty apparent that they won t be good, but market reaction to these results will help indicate if current levels have priced in a bad earnings environment.
In addition to grim ISM reading, investors digested other bad economic news around the world.
In Asia, Singapore said Friday its economy shrank by an annualized rate of 12.5 percent in the fourth quarter of 2008, while China s manufacturing sector, which accounts for 43 percent of the economy, contracted for a fifth straight month in December. Meanwhile South Korea, Asia s fourth-largest economy, suffered a trade deficit for 2008 – its first in a decade.
And in Europe, manufacturing activity contracted for the seventh month running in December for the countries using the euro, falling at its sharpest rate for at least 11 years, according to the monthly purchasing managers index for the euro-zone.
And in Britain, house prices fell in 2008 at their fastest rate for at least 25 years, the country s biggest mortgage lender HBOS said. Elsewhere, the Chartered Institute of Purchasing and Supply reported that Britain s manufacturing sector, which accounts for around 15 percent of the total economy, suffered its second worst month since 1992 in December.
It is unfortunate that today s headlines serve as a depressing reminder of the synchronous downturn under way in the global economy, said Neil Mellor, an analyst at Bank of New York Mellon.
After one of the worst years ever for global equities, many expect volatility to remain the name of the game for some time to come, especially as the first part of the new year will likely be dominated by mounting economic gloom and massive job losses.
Stock markets have historically started to recover around 6 months to 9 months before the economic activity data turns for the better. Many stock market observers think the markets should be pushing higher, rather than falling or trading largely flat, possibly by the middle of the year.
Markets will eventually respond to a view that the bottom will soon be reached in global asset value decline and that by the second half of the year global credit market activity should have begun to improve, said Howard Wheeldon, senior strategist at BGC Partners in London.
Elsewhere in Asia, South Korea s Kospi added 2.9 percent to 1,157.40, Singapore s benchmark rose 3.9 percent, and Mumbai s Sensex traded 0.6 percent higher. Australia was modestly lower.
Markets in Japan, mainland China, Taiwan, Indonesia, the Philippines, Thailand and New Zealand were closed.
Oil prices eased further, with light, sweet crude for February delivery down $0.96 at $43.64. The contract rocketed on New Year s Eve to settle $5.57 higher at $44.60.
Meanwhile, the dollar strengthened 0.4 percent to 91.15 yen while the euro was 0.5 percent lower at $1.3914. -AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.
