Stocks recover as US hopes offset China worries
Over the past few weeks, stocks have been buoyant as U.S. economic figures were upbeat and concerns over Europe's debt crisis eased. Many stock indexes are trading at multi-month highs, while the main U.S. markets at their highest levels in nearly four years.
But investors have grown skeptical this week that more gains can be sustained in the near term, especially as recent Chinese economic figures have been slightly disappointing. That's important for the world economy as China has helped cushion the blow from the financial crisis and the ensuing recession over the past few years.
"Despite the China worries the markets are showing great resilience mainly underpinned by strong U.S. economic data," said Jordan Lambert, a trader at Spreadex.
In Europe, Germany's DAX rose 0.2 percent to 7,065 while the CAC-40 in France was 0.3 percent higher at 3,542. The FTSE 100 index of leading British shares was up 0.1 percent at 5,897 ahead of the government's annual budget.
Wall Street was poised for solid gains at the open, too — Dow futures and the broader S&P 500 futures were both up 0.3 percent. Later in the day, investors will eye new data for existing U.S. home sales, which are forecast to have risen about 1 percent in February.
The more positive market tone also helped the euro, which was trading 0.3 percent higher at $1.3270.
Earlier in Asia, worries over the pace of the slowdown in the world's No. 2 economy continued to weigh on sentiment. On Tuesday mining giant BHP Billiton warned that Chinese demand for iron ore — used to make steel — was flattening. And in another sign of cooling growth in the world's No. 2 economy, new home prices dropped in 45 Chinese cities in February as the government implemented measures to cool property speculation.
The Nikkei 225 index in Japan, which counts China as its most important trading partner, fell 0.6 percent to 10,086.49, while Hong Kong's Hang Seng shed 0.2 percent to 20,856.63. China's main Shanghai index recovered 0.1 percent to close to 2,378.20, having dropped sharply in the previous session.
The rising cost of crude is also a threat to the global economic outlook as it could spark inflation and hurt consumer spending. On Tuesday, China raised the price of retail gasoline for the second time in two months. Benchmark crude for May delivery was up 59 cents to $106.68 a barrel in electronic trading on the New York Mercantile Exchange.