World markets rise on eased China credit worry
SEOUL, South Korea - World markets extended gains Tuesday on eased concerns about a cash crunch in China and continued optimism over the U.S. economy.
Trading volumes remained light a day ahead of Christmas. Asian stocks advanced amid a drop in the Chinese interest rate charged on loans from one bank to another. A spike in rates on Chinese bank-to-bank lending earlier this week stirred anxiety among investors that the cash shortage could force banks to restrain commercial lending and pressure the world's second-largest economy.
After the People's Bank of China took another measure of injecting 29 billion yuan ($4.8 billion) on Tuesday, the rate banks pay each other for an overnight loan had eased to a 4.1 percent. The rate for a one-week loan dropped to 6.2 percent.
Tokyo's Nikkei 225 index inched up 0.1 percent to 15,889.33, after surpassing the 16,000 level for the first time in six years in the morning session. China's Shanghai Composite added 0.2 percent to 2,092.91. Hong Kong's Hang Seng index gained 1.1 percent to 23,179.55.
In Hong Kong, stocks of China Mobile Ltd. rose 0.5 percent boosted by its deal to sell iPhones in China. South Korea's benchmark Kospi gained 0.2 percent to 2,001.59. Shares in Singapore, Australia and New Zealand also rose.
In early trading in Europe, Britain's FTSE 100 index was up 1.1 percent to 6,678.61, while France's CAC 40 edged up 0.2 percent to 4,222.80. The German stock market was closed. U.S. stocks appeared set for a modest gain with Dow futures up 0.03 percent.
The broader S&P 500 index futures stayed unmoved. Stock markets enjoyed a strong run over the past few days as investors cheered data showing that the U.S. economic recovery is gaining strength. Positive economic figures on the world's largest economy helped ease concerns about the impact on emerging markets from the Federal Reserve's scaling back of its stimulus programs.
A batch of upbeat reports on the U.S. economy strengthened optimism one day before Christmas. International Monetary Fund chief Christine Lagarde said the Washington-based institution would raise its 2014 U.S. growth forecast from the current estimate of 2.5 percent, citing more certainty in 2014. Her remarks came after Friday data showed the U.S. grew at an annualized rate of 4.1 percent in the third quarter of the year, up from the previous estimate of 3.6 percent.
In data released Monday, the U.S. Commerce Department said consumer spending rose 0.5 percent in November, supporting the view that American consumers may be making a comeback.
Stock markets have largely held their own despite tensions in China's credit markets. Chinese banks turned to money markets in recent weeks for extra cash found less than usual, setting off a bidding war that pushed up interest rates. Analysts said the main reason why interbank lending rates have gone up is that Chinese banks are building up their cash reserves in order to meet tighter regulatory requirements.
The increase has also come as the Fed has ended months of speculation and begun "tapering" its stimulus. For now, most analysts don't think it's a major cause for concern, but developments in China's credit matters will be monitored carefully over the coming days and weeks.
In the currency markets, the euro was 0.2 percent weaker at $1.3676 while the dollar inched up 0.1 percent to 104.25 yen. In the oil markets, a barrel of benchmark crude was 41 cents lower at $98.91.
Trading volumes remained light a day ahead of Christmas. Asian stocks advanced amid a drop in the Chinese interest rate charged on loans from one bank to another. A spike in rates on Chinese bank-to-bank lending earlier this week stirred anxiety among investors that the cash shortage could force banks to restrain commercial lending and pressure the world's second-largest economy.
After the People's Bank of China took another measure of injecting 29 billion yuan ($4.8 billion) on Tuesday, the rate banks pay each other for an overnight loan had eased to a 4.1 percent. The rate for a one-week loan dropped to 6.2 percent.
Tokyo's Nikkei 225 index inched up 0.1 percent to 15,889.33, after surpassing the 16,000 level for the first time in six years in the morning session. China's Shanghai Composite added 0.2 percent to 2,092.91. Hong Kong's Hang Seng index gained 1.1 percent to 23,179.55.
In Hong Kong, stocks of China Mobile Ltd. rose 0.5 percent boosted by its deal to sell iPhones in China. South Korea's benchmark Kospi gained 0.2 percent to 2,001.59. Shares in Singapore, Australia and New Zealand also rose.
In early trading in Europe, Britain's FTSE 100 index was up 1.1 percent to 6,678.61, while France's CAC 40 edged up 0.2 percent to 4,222.80. The German stock market was closed. U.S. stocks appeared set for a modest gain with Dow futures up 0.03 percent.
The broader S&P 500 index futures stayed unmoved. Stock markets enjoyed a strong run over the past few days as investors cheered data showing that the U.S. economic recovery is gaining strength. Positive economic figures on the world's largest economy helped ease concerns about the impact on emerging markets from the Federal Reserve's scaling back of its stimulus programs.
A batch of upbeat reports on the U.S. economy strengthened optimism one day before Christmas. International Monetary Fund chief Christine Lagarde said the Washington-based institution would raise its 2014 U.S. growth forecast from the current estimate of 2.5 percent, citing more certainty in 2014. Her remarks came after Friday data showed the U.S. grew at an annualized rate of 4.1 percent in the third quarter of the year, up from the previous estimate of 3.6 percent.
In data released Monday, the U.S. Commerce Department said consumer spending rose 0.5 percent in November, supporting the view that American consumers may be making a comeback.
Stock markets have largely held their own despite tensions in China's credit markets. Chinese banks turned to money markets in recent weeks for extra cash found less than usual, setting off a bidding war that pushed up interest rates. Analysts said the main reason why interbank lending rates have gone up is that Chinese banks are building up their cash reserves in order to meet tighter regulatory requirements.
The increase has also come as the Fed has ended months of speculation and begun "tapering" its stimulus. For now, most analysts don't think it's a major cause for concern, but developments in China's credit matters will be monitored carefully over the coming days and weeks.
In the currency markets, the euro was 0.2 percent weaker at $1.3676 while the dollar inched up 0.1 percent to 104.25 yen. In the oil markets, a barrel of benchmark crude was 41 cents lower at $98.91.
