LONDON (Dow Jones)--European stocks strengthened Monday following a return of confidence in the health of the global economy and a surge in commodities.
Although the major indexes did not open as high as the opening calls suggested, by 0750 GMT all were firmer. The pan-European Stoxx 600 increased 1.0% to 237.2. London's FTSE 100 was up 1.1% at 4902.7, Frankfurt's DAX gained 0.9% to 5511.4 and Paris's CAC-40 was up 0.8% at 3646.0.
The markets were dominated by talk of an improvement in the global economic outlook, particularly following stronger U.S. housing data Friday. Additionally, they were helped by comments from Ben Bernanke, chairman of the Federal Reserve, who gave his clearest signal yet that he thinks the global economy is emerging from recession.
"Talk of recession has been replaced by talk of recovery. Whilst it may be too early to describe it as a feel-good factor, there is certainly a more positive feeling across the markets this morning," said Brian Myers, sales trader at ODL Securities.
Other analysts agreed. "The euro-area economy seems to have found a bottom," said a note from Nomura.
"But we expect a long period of sub-par growth. The European Central Bank is likely to remove liquidity measures early next year, before hiking rates," it concluded.
Meanwhile, European markets were dominated by rising metal prices, with mining stocks leading the charge. Kazakhmys was up 4.8% at 970.5 pence and Xstrata gained 5.1% to 877.0 pence.
The corporate agenda was light Monday. Amlin increased 5.8% to 376.0 pence following its well-received interim results and Bunzl, up 4.2% at 575.0 pence, also rose after its well-received first-half results.
Additionally, Bovis Homes Group gained 2.9% to 553.0 pence on its results, which were in line with expectations. With its positive outlook and the lively momentum from last week's U.S. housing data, the Stoxx Europe 600 construction and materials sector was up 2.3%.
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.
China shares, which have been a major cue for Asian markets recently, managed to come off their lows. Shanghai's Composite index was up 1.1%, having briefly dipped 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 1.7% and Hong Kong's Hang Seng index was 1.7% 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 dollar strengthened against major currencies while the yen was weaker against the greenback and the euro as rising equities spurred selling of the safe-haven unit.
By 0815 GMT, the dollar was at Y95.04, up from Y94.39 in New York late Friday, with the euro at Y135.80, up from Y135.15. The euro eased to $1.4292, down from $1.4326.
Elsewhere, base metals made a strong start to the week but spot gold was little changed after rallying to a one-week high Friday. The yellow metal was trading at $954.70 per troy ounce, down 45 cents from the New York close.
Nymex October front-month crude oil futures were 25 cents higher on Globex at $74.14 per barrel. "We could now easily move towards the $80 mark if the growing enthusiasm about the budding economic recovery continues to dominate sentiment," said Edward Meir at MF Global
Finally, European bond markets were lower Monday, with investors moving towards equity plays. Analysts at WestLB said the near-term direction in bunds will likely continue to reflect developments in equity markets. At 0815 GMT, the September bund was down 0.12 at 121.91.
-By Andrea Tryphonides, Dow Jones Newswires; +44-20-7842-9281; andrea.tryphonides@dowjones.com
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