World stock markets rose Thursday, with Japan’s Nikkei up around 4 per cent, after Bank of America Corp. said it will repay $45-billion of government bailout money and as investors prepared for a crucial policy statement from the European Central Bank.
In Europe, the FTSE 100 index of leading British shares was up 37.42 points, or 0.7 per cent, at 5,364.81 while Germany’s DAX rose 56.86 points, or 1 per cent, to 5,838.54. The CAC-40 in France was 35.98 points, or 1 per cent, higher at 3,831.90.
Earlier in Asia, Japanese stocks were boosted by a fall in the value of the yen which, if sustained, could help exporters – Japan is particularly dependent on exporting its cars and electronics for its economic growth. The Nikkei 225 stock average jumped 368.73 points, or 3.8 per cent, to 9,977.67.
Sentiment was mainly buoyed by the news that Bank of America intends to repay money it received during the height of the credit crisis last year and after its purchase of Merrill Lynch earlier this year to escape the heightened supervision that goes along with it.
“The significance of the BoA move is that they are in a position to be able to do it,” said Kit Juckes, chief economist at ECU Group.
“This, surely, is a massive endorsement of the monetary policies we have seen in place for the last year,” he added.
Attention later will focus on the European Central Bank, which will unveil its latest policy statement and economic forecasts.
Analysts expect a number of significant decisions and announcements from the central bank for the 16 countries that share the euro – even though the benchmark rate will likely stay at the record low of 1 per cent for months to come.
In particular, they will be looking to see what President Jean-Claude Trichet says in his press conference about liquidity measures introduced to keep the banking system from collapse and to limit the scale of recession.
Investors will then turn their attention to Friday’s U.S. non-farm payrolls report for November – data that often sets the tone in the markets for a week or two.
Wall Street was poised for a steady, if unspectacular, opening – Dow futures were up 52 points, or 0.5 per cent, at 10,491 while the broader Standard & Poor’s 500 futures rose 6.6 points, or 0.6 per cent, to 1,114.50.
U.S. crude edged higher, as fund activity helped the market to recover from a sell-off the previous session, but huge amounts of oversupply curbed gains.
NYMEX crude for January delivery rose 66 cents to $77.26 a barrel by 1037 GMT, after settling down $1.77 at $76.60 on Wednesday.
Brent crude rose 91 cents to $78.79 per barrel after touching a session high of $78.91.
Gold hit a record high over $1,225 an ounce on Thursday, exerting an irresistible pull on investors seeking an alternative to the dollar, despite a Chinese central bank official warning against a potential asset price bubble.
Gold has risen by more than 7 per cent since touching a low of $1,136.80 last Friday on now-waning fears that the Middle Eastern emirate Dubai might default on its debt, which spurred investors to sell the metal to raise cash to cover losses.
Spot gold rose as high as $1,226.10 per ounce before slipping to $1,1218.90 by 0826 GMT, still up $3 from New York's notional close.
U.S. gold futures for February delivery touched an all-time high of $1,227.50.
