LONDON (Dow Jones)--European stocks are expected to open sharply higher Monday, gaining momentum from positive U.S. housing data last week, a bright start in Asia and a surge in commodities.
"Traders will likely follow the buying spree that started in Asia," said David Evans, market analyst at BetOnMarkets.com. He also noted that the rise in copper and oil prices is fueling speculation that the global economic recovery in strengthening.
Evans predicted that London's FTSE 100 index would open up 84.2 points, or 1.7%, at 4935.1, Paris's CAC-40 31.4 points, or 0.9%, higher at 3647.4 and Frankfurt's DAX up 40.9 points, or 0.7%, at 5503.6.
Earlier, Asian stock markets were sharply higher after a strong showing on Wall Street Friday, with Japanese automakers boosted by a weakening yen and mining shares pushing up across the region.
However, China shares, which have been a major cue for Asian markets recently, were only modestly higher. Shanghai's Composite index was up 0.4% after briefly dipping into the red in the morning session.
Japan's Nikkei 225 rose 3.3% while South Korea's Kospi Composite gained 1.7%. Taiwan shares were up 1.9% and Hong Kong's Hang Seng index was 1.9% higher.
The Chinese market was in consolidation mode, said Zhang Yong, an analyst at Great Wall Securities. This followed last week's roller-coaster ride, when investors flocked to sell on fears of restrictions being imposed on bank lending, or buy on hopes Beijing would announce market-supportive measures.
In the U.S. Friday, stocks ended higher, propelled by better news on the housing market.
Stocks surged early in the day after data showed that existing-home sales rose to their highest level in nearly two years in July.
The Dow Jones Industrial Average gained 1.7% to 9506.0. For the week, the index added 2.0%. The Nasdaq Composite index rose 1.6% to 2020.9 on Friday. For the week, the index rose 1.8%. The Standard & Poor's 500 index rose 1.9% to 1026.1. It added 2.2% for the week.
In the foreign exchanges Monday, the yen was weaker against the dollar and the euro as rising equities spurred selling of the safe-haven unit. By 0630 GMT, the dollar was at Y94.88, up from Y94.3 in New York late Friday, with the euro at Y135.86, up from Y135.15. The euro was little changed against the dollar at $1.4319, down from $1.4326.
Some analysts doubted the euro would rise much further from here. "The real question on everyone's lips is whether the global outlook and the European backdrop is strong enough to warrant the high level for the currency. Yes, the world looks better than it did last week, but is it strong enough to see currencies break into new ranges?" asked Bank of New Zealand strategist Danica Hampton.
Base metals made a strong start to the week, while spot gold was little changed after rallying to a one-week high Friday. The yellow metal was trading at $953.50 per troy ounce, down 55 cents from the New York close.
Nymex October front-month crude oil futures were 35 centshigher on Globex at $74.24 per barrel. Evans said oil prices were likely to test the $80 per barrel mark this week.
Finally, European bond markets opened lower Monday, with investors moving towards equity plays. At 0630 GMT, the September bund was down 0.08 at 121.95.
-By Andrea Tryphonides, Dow Jones Newswires; +44-20-7842-9281; andrea.tryphonides@dowjones.com
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