US and European stocks advance in volatile trade

Stocks rose on Wall Street and in Europe yesterday as investors eyed a quick return of Libyan oil to the market after an imminent defeat of Muammar Gaddafi, while Asian indices were mostly down.

Fears of fresh recession, which recently sent global equities plunging, persisted however and analysts said volatile trading would continue ahead of this week’s key economic data and meeting of central bank chiefs.

Gold hit fresh record highs close to $1,900 an ounce as investors sought out safe-haven investments.

The dollar rose to 76.77 yen from 76.50 yen in New York on Friday, when it hit a post- World War II low of 75.95 yen. The euro fell to $1.4398 yesterday after climbing to $1.4424 earlier on.

US stock markets surged at the opening, but later pulled back. Nearing midday the Dow Jones Industrial Average was up 0.37 per cent to 10,857.98 points.

The broader S&P 500 was down 0.16 per cent to 1,121.68 points, while the tech-heavy Nasdaq Composite was nearly flat, climbing 0.07 per cent to 2,343.40 points.

“Boosting sentiment this morning are hopes for lower oil prices, as it seems that Gaddafi’s regime is on the verge of collapse,” said Sarah Wasserman, an analyst with Schaeffer’s Investment Research.

Europe’s main stock markets rallied in late afternoon trade, but also saw gains narrow and Frankfurt ended with a narrow loss.

Asian stocks closed mostly lower yesterday although they were not down as sharply as last week. Tokyo continued to drop as the strong yen weighed on Japanese exporters.

Markets were meanwhile also looking ahead to German investor confidence data due today and a US growth update and central bankers’ meeting on Friday.

Investors are hoping that US Federal Reserve chairman Ben Bernanke will unveil new stimulus measures aimed at juicing the stalled US economy in a speech scheduled for later this week.

“Investors are hopeful this Monday morning, with expectations high ahead of Federal Reserve chairman Ben Bernanke’s speech on Friday,” Ms Wasserman said.

Most European stock markets rebounded yesterday, with London’s FTSE 100 climbing 1.08 per cent to 5,095.3 points. In Paris, the CAC 40 rose 1.14 per cent to 3,051.36 points, while in Frankfurt the DAX ended down slightly, dipping 0.11 per cent to 5,473.78 points. Swiss stocks gained 0.99 per cent, Milan climbed 1.78 per cent and Madrid rose 1.87 per cent.

Share prices in oil majors were boosted by plunging Brent crude prices on the prospects of Libyan oil production returning to normal after a rebel advance deep into Tripoli left Kadhafi close to defeat, traders said.

Shares in Italy’s ENI jumped 6.33 per cent, while those in France’s Total climbed 2.25 per cent.

Earlier, Tokyo closed down 1.04 per cent, Seoul shed 1.96 per cent and Sydney lost 0.48 per cent. Hong Kong rose 0.45 per cent.

“Losses may be relatively modest compared to some of the recent swings we’ve seen and indeed some markets are managing to grind higher but there’s no escaping the fact that the outlook for global economic growth is being questioned,” said Cameron Peacock, an analyst at trading group IG Markets.

“As a result there are few who will be out there willing to take on much additional risk right now.”

CMC Markets analyst Michael Hewson said that the prospect of a central bank currency intervention was likely to weigh on global markets this week.