World Stocks Up As China Slows Less Than Expected

Published January 17, 2012 9:27AM (EST)

BANGKOK (AP) — Global stock markets rallied Tuesday as China's still robust growth in the final quarter of 2011 eased fears of an abrupt slowdown in world's second-largest economy.

Benchmark oil rose above $100 per barrel, while the dollar fell against the yen and the euro.

In early European trading, Britain's FTSE rose 0.8 percent at 5,702.64. Germany's DAX was 0.9 percent higher at 6,278.23 and France's CAC-40 rose 1 percent to 3,255.78. Wall Street was also set for a higher opening after a three-day holiday. Dow Jones industrial futures rose 0.7 percent to 12,482 and S&P 500 futures gained 0.7 percent to 1,298.50.

Shares in mainland China and Hong Kong shot up after the release of government figures showing that growth in China slowed in the final quarter of 2011 to 8.9 percent, its lowest rate in 2 1/2 years.

Markets welcomed the news, as growth had been expected to settle at 8.7 percent, analysts said.

"That means China's economy is not slowing down as quickly as expected. That gave an overall boost to market sentiment," said Jackson Wong, vice president at Tanrich Securities in Hong Kong.

The slowdown was also in line with government plans to cool China's overheated economy. Analysts expect Beijing to try to stimulate growth this year with an interest rate cut or other measures to free up money for lending.

Hong Kong's Hang Seng soared 3.2 percent at 19,627.75. The benchmark Shanghai Composite Index jumped 4.2 percent, the most in over two years, closing at 2,298.38. The Shenzhen Composite Index of China's second, smaller exchange, surged 5.1 percent to 860.25.

"The gains were mainly due to the data released today, which beat the forecasts," said Li Jianfeng, an analyst at Caida Securities, based in Shanghai. But he said the room for further gains was limited since the general trend is toward slower growth.

The news that China's economy expanded 8.9 percent in October-December was seen as evidence that Beijing may have staved off a "hard landing" for the economy, though it also prompted expectations authorities may act to support growth.

Comments by Shanghai Mayor Han Zheng signaling the lack of any timetable for introducing an "international board" of foreign company shares in Shanghai also encouraged investors who worry such moves might put added pressure on share prices.

Japan's Nikkei 225 index rose 1.1 percent to close at 8,466.40. South Korea's Kospi added 1.8 percent to 1,892.74. Australia's S&P/ASX 200 gained 1.7 percent to 4,215.60.

Investor sentiment still faces multiple headwinds — the latest being Standard & Poor's downgrade of the eurozone's rescue fund by one notch to AA+.

Gains overnight in gold, copper and oil helped commodity shares. Hong Kong-listed Zijin Mining Group Co. Ltd., China's biggest gold miner, soared 12.5 percent.

Hong Kong-listed China Petroleum and Chemical Corp., Asia's biggest oil refiner that is also known as Sinopec, surged 4.7 percent. China National Offshore Oil Corp., or CNOOC, added 5.3 percent.

Australian mining shares were also big gainers, including uranium miner Paladin Energy, which leapt 11.8 percent after it reported record production in the three months to December and reaffirmed its full-year production targets.

U.S. markets were closed Monday for a public holiday.

In currency trading, the euro rose to $1.2756 from $1.2670 late Friday in New York. The dollar fell to 76.60 yen from 76.96 yen.

Benchmark oil for February delivery jumped $1.75 to $100.45 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 40 cents to settle at $98.70 in New York on Friday.


AP Business Writer Elaine Kurtenbach contributed from Shanghai.


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By Salon Staff

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