World equities rose yesterday after the G7 vowed to stem the yen’s rise and help the Japanese economy, which has been shattered by a record earthquake, tsunami and nuclear crisis.
However, analysts said the positive impact was partly offset by news that the United Nations has agreed to air strikes against African crude exporter Libya, which sent oil prices rising once again.
Oil prices then fell after Libya called a ceasefire with rebels, easing fears about possible damage to its energy facilities.
The G7 rich nations, seeking to ease Japan’s plight, said in a statement yesterday that they had agreed to “cooperate as appropriate” to address excessive and volatile movements in the foreign exchange market.
Traders welcomed the decision which was made after key talks between authorities in Japan, the United States, the eurozone, Canada and Britain.
In reaction, the yen weakened, having spiked earlier this week to the highest dollar level since World War II.
The Tokyo stock market soared 2.72 per cent after the G7 statement, as a weaker yen lifted exporters. However, the market was still more than 10 per cent down over the week as investors fretted over the escalating nuclear crisis.
Elsewhere in Asia yesterday, Sydney jumped 1.56 per cent, Shanghai added 0.61 per cent, Seoul ended 1.13 per cent higher and Taipei gained 1.35 per cent.
Meanwhile Japan battled a nuclear and humanitarian crisis, with engineers working to restore power to the stricken Fukushima power plant in what the UN’s top atomic expert said was a “race against time”.
Europe’s main stock markets closed higher, with London’s FTSE 100 index of leading shares up 0.39 per cent at 5,718.13 points.
In Paris, the CAC 40 climbed 0.63 per cent to 3,810.22 points and in Frankfurt the DAX added 0.11 per cent to 6,664.4 points.
US stocks rallied with the Dow Jones Industrial Index up 0.89 per cent to 11,879.56 points at 1700 GMT, extending Thursday’s gains.
The tech-rich Nasdaq Composite rose 0.42 per cent to 2,647.19, while the S&P 500-stock index advanced 0.75 per cent to 1,283.32.
“The G7 intervention has lifted equity sentiment simply because yen weakness is good news for Japanese exporters so initially the reaction from stocks ought to be positive,” said Lloyds Banking Group economist Kenneth Broux.
“This is countered, however, by what appears to be developing into a military response in Libya which – in a worst case scenario – would again send oil prices through the roof.
Frederic Dickson at DA Davidson called Libya’s ceasefire decision “a positive for global equities”.