World stocks up on US data, Merkel

By PAMELA SAMPSON | August 17, 2012 | 10:36 AM EDT

FILE - In this May 21, 2012 file photo, television correspondent Sabrina Quagliozzi reports from inside the Nasdaq MarketSite in New York's Times Square. Facebook's stock plunged to a new low Thursday, Aug. 16, 2012, after the expiration of a ban that had prevented some early investors and insiders from dumping millions of additional shares they own in the social-networking leader. Firms ranging from Accel Partners to Goldman Sachs, Zynga CEO Mark Pincus and Facebook board members James Breyer, Peter Thiel and Reid Hoffman were among those free to sell stock they own, after the lifting of a ban known as a lock-up period. If many of them took advantage of that, Facebook's stock could decline because the market would be flooded with nearly two-thirds more shares. (AP Photo/Richard Drew)

AMSTERDAM (AP) — Mildly positive news about the U.S. economy and reassuring words from German Chancellor Angela Merkel about the euro were enough to push most global financial markets higher by the start of U.S. trading Friday.

European stocks rose in early trading. Britain's FTSE 100 gained 0.1 percent to 5,843 while Germany's DAX was 0.4 percent higher at 7,019 and France's CAC-40 was up 0.25 percent at 3,481. In the Netherlands, the AEX index rose 0.7 percent to hit a year-high of 336.

While visiting Canada, Merkel repeated her commitment to doing whatever is needed to preserve the euro. In addition, German July producer prices came in lower at 0.4 percent versus expectations of 0.9 percent year on year — potentially giving ammunition to those who argue the European Central Bank could further ease monetary policy if it wishes.

Wall Street opened mixed after a strong session Thursday. The Dow Jones industrials were 0.15 points lower — flat in percent terms — at 13,249.96, while the S&P 500 rose 0.1 percent to 1,416.96.

The U.S. government reported Thursday that building permits jumped to their highest level since August 2008, a hint of stronger construction in the coming months. Analysts are watching closely to see whether the University of Michigan Consumer Sentiment Index confirms other recent positive data, including better-than-expected retail sales and increasing nonfarm payrolls.

Stephen Lewis, Chief Economist at Monument Securities, said the U.S. data are not likely to be decisive, and a period of relative quiet on financial markets seems destined to come to an end with Friday's session.

"The chances are ... equity markets will soon feel compelled to refocus on issues relating to the euro zone," he said.

The 17 countries that use the euro have been struggling for the past three years to cope with huge debts and recession. Spain and Italy, the two big trouble spots, are threatened with a financial collapse that could tear the 13-year-old currency union apart and rock the global economy.

The immediate flashpoint may be Greece, which is hoping for more lenient terms on its most recent bailout package.

Rabobank fixed income analyst Richard McGuire noted that Greece is facing a bond repayment on Aug. 20, and that a ruling by Germany's constitutional court on the legality of one of Europe's bailout funds and national elections in the Netherlands are both coming on Sept. 12. He said the possible outcomes of these events are beginning to creep into investors' calculations.

Stocks in Asia registered broad gains. Japan's Nikkei 225 index rose 0.8 percent to close at 9,162.50 — its highest finish in more than three months, as the government forecast the country will soon emerge from its 15-year battle with deflation. Hong Kong's Hang Seng added 0.8 percent to 20,116.07 and Australia's S&P/ASX 200 gained 0.9 percent to 4,370.10.

Analysts were skeptical about Tokyo's optimism.

"I think the main thing coming out of the macro side is that It looks like the U.S. economy is growing, albeit slowly," said Lorraine Tan, director at Standard & Poor's equity research in Singapore.

South Korea's Kospi fell by 0.6 percent to 1,946.54. Mainland Chinese shares were mixed. The Shanghai Composite Index gained 0.1 percent to 2,114.89. The Shenzhen Composite Index lost 0.3 percent to 876.93.

Crude oil futures were down 20 cents to $95.40 per barrel on the New York Mercantile Exchange, following a strong rise Thursday.

In currencies, the euro fell to $1.2323 from $1.2362 late Thursday in New York. The dollar rose to 79.47 yen from 79.25 yen.


AP writer Pamela Simpson contributed to this story from Bangkok; researcher Fu Ting contributed from Shanghai.