Stocks boosted as US unveils new stimulus plan
World markets showed further signs of recovery Tuesday, with most Asian and European stocks rising on hopes of another US economic stimulus package and a thaw in frozen credit markets.
Investors took their cue from Wall Street where stocks soared overnight as Federal Reserve chief Ben Bernanke threw his support behind another government spending package to kick-start the world's largest economy.
"A strong finish on Wall Street last night as the previously frozen credit markets continue to thaw following recent government intervention has lifted sentiments in many Asian markets, and the gains look set to continue into Europe," said CMC Markets dealer Matt Buckland on Tuesday.
In Europe, Paris stocks surged 1.97 percent and Frankfurt shares gained 0.81 percent in early morning trading. London gained more than one percent at the open, before easing back to stand 0.06 percent down.
In Asia, Tokyo jumped 3.34 percent as Sydney gained 3.9 percent. But Seoul closed down 0.95 percent and Hong Kong stocks were down 2.02 percent.
"Short-term money markets are also relatively calm," said Masatoshi Sato, a broker at Mizuho Investors Securities. The global financial problems appeared to have receded somewhat for now, he added.
In Wall Street action on Monday, New York's Dow industrials index had leapt 4.67 percent.
But market watchers said recession fears in the United States, Japan and Europe, as well as jitters about the outlook for corporate earnings, may limit the scope for a further rebound on battered global stock markets.
China's weaker-than-expected economic growth figures released on Monday highlighted the extent to which the credit crunch has spread around the world.
"While the risks of financial meltdown are receding, the economic downturn is intensifying as data in the US, eurozone and Asia has shown in the last few days," said analysts at UBS.
In the foreign exchange market on Tuesday, the euro fell to a 19-month low point of 1.3237 dollars in early morning trading, on concerns about slowing European economic growth, dealers said.
The single currency later stood at 1.3250 dollars, down from 1.3343 late in New York on Monday. The US unit rose on signals of a possible plan to stimulate the US economy as evidence mounts of a slowdown in Europe, traders said.
Governments have pumped billions of dollars into troubled banks in recent weeks while central banks have injected huge amounts of cash into money markets in an effort to ease a credit crunch.
The danger of a "global catastrophe" has decreased after world governments intervened to boost liquidity and confidence in the financial system, Australian central bank chief Glenn Stevens said.
Analysts agreed, noting that the cost of one bank borrowing from another had eased, suggesting that the credit crunch is abating somewhat.
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