World stocks up on hopes for a US budget deal

Published on NewsOK Modified: November 29, 2012 at 3:28 am •  Published: November 29, 2012
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BANGKOK (AP) — Signs that U.S. political leaders may be closing in on a budget deal to avoid the so-called "fiscal cliff" boosted world stock markets Thursday.

Comments by President Barack Obama and Speaker of the House John Boehner that a deal to avoid a budget crisis could be reached before year's end was enough to boost markets in the face of disappointing U.S. home sales, a critical indicator of whether the economy is improving.

European stock markets opened higher. Britain's FTSE 100 rose 0.4 percent to 5,826.96. Germany's DAX advanced 0.5 percent to 7,382.93. France's CAC-40 added 0.7 percent to 3,538.65.

Wall Street also appeared headed for a session of gains. Dow Jones industrial futures rose 0.6 percent to 13,030. S&P 500 futures were up 0.6 percent at 1,416.10.

Earlier, Japan's Nikkei 225 index rose 1 percent to close at 9,400.88. Hong Kong's Hang Seng jumped 1 percent to 21,922.89 and South Korea's Kospi added 1.2 percent to 1,934.85. Australia's S&P/ASX 200 gained 0.7 percent to 4,477.70. Benchmarks in Singapore, Taiwan and New Zealand also rose.

But mainland Chinese stocks extended their slump to a fourth day. The Shanghai Composite Index lost 0.5 percent to 1,963.49, the lowest closing since Jan. 16, 2009. The smaller Shenzhen Composite Index lost 1 percent 743.43.

"Investors are getting more and more pessimistic towards the market after recent losses," said Peng Yunliang, a Shanghai-based analyst.

Obama and the U.S. Congress have until Jan. 1 to agree on how to trim the country's unwieldy deficit. Otherwise, a series of automatic tax increases and sharp spending cuts will take effect that could drag the world's No. 1 economy into recession. Obama said Wednesday he believes a "framework" for an agreement can be reached before Christmas.

"It's really a headline market at the moment. We'll probably continue to see headlines on the fiscal cliff supersede any economic data until it is resolved," said Stan Shamu of IG Markets in Melbourne. "The longer it stretches out, the more risk there is that it will cause further volatility in the markets. But for now, it seems markets are on the right track."