Global markets surge on upbeat growth prospects

Stock markets around the world sprinted ahead yesterday on signs of robust economic momentum in Asia and Europe that also helped bolster the euro against the dollar.

The rally got under way early in the day in Asia where investors took heart from news that the Japanese economy eclipsed expectations and grew 5.0 per cent in the first quarter and that Chinese exports surged in May.

A later upward revision to its eurozone 2010 eurozone growth forecast by the European Central Bank, from 0.8 to 1.0 per cent, helped sustain the trend.

After a strong showing in Asia, where Tokyo, closed with a gain of 1.10 per cent, stocks took off in Europe.

The London FTSE 100 index rose 0.92 per cent to close at 5,132.50 points while the CAC 40 in Paris added 2.03 per cent to finish at 3,516.64. The Frankfurt the DAX rose 1.20 per cent to 6,056.59 points.

Elsewhere there were gains of 3.72 per cent in Madrid, 2.53 per cent in Milan, 1.49 per cent in Amsterdam and 0.91 per cent on the Swiss Market Index.

Late-day market market sentiment was positively affected by a statement from the head of the European Central Bank, Jean-Claude Trichet, that austerity plans adopted by several debt-dogged eurozone nations were not likely to snuff out growth.

In fact, the bank said, the eurozone should grow faster this year than had been foreseen until now.

"The market came to realise that in the short term the picture is not as bleak as it had thought," said one Paris trader.

On Wall Street stocks rebounded sharply from the previous day's slump on gains in Japan's growth pace and Chinese exports.

The Dow Jones Industrial Average at mid-day was up 2.39 per cent at 10,127.26 while the tech-rich Nasdaq index had risen 2.09 per cent to 2,203.95.

"The bulls are finding some energy from a plethora of stronger-than-expected economic reports out of Asia, which is helping overshadow a smaller-than-expected decline in US weekly initial jobless claims," Charles Schwab & Company analysts said in a note to clients. China said its trade surplus soared in May on strong foreign demand for Chinese-made clothes and electronics as exports leaped 48.5 per cent from a year ago.

In Japan, the government reported the world's second-biggest economy grew five per cent in the first quarter, faster than an initial estimate of 4.9 per cent.

On the currency market, the seemingly brighter macroeconomic climate encouraged investors to venture out of the safe haven dollar and into riskier currencies, such as the euro.

The single European currency, which has been hammered in recent weeks on fears for the financial health of the debt-encumbered eurozone, rose to $1.2108 from $1.1975 on Wednesday.

The dollar was trading at 91.05 yen, up from 91.28. The pound was at 1.4672 dollars against 1.4527 on Wednesday.