Europe, Asia Markets Rise After Selloff

03/15/2007

LONDON (AP) - European and Asian stock markets rebounded Thursday, relieved by a recovery on Wall Street after a plunge earlier in the week triggered by worries about a slowdown in the U.S. economy.

Europe's three biggest markets were trading higher. The London's benchmark FTSE 100 Index rose 1.5 percent, while Germany's DAX Index advanced 1.5 percent and France's CAC rose nearly 1 percent.

Investors who had dumped stocks a day earlier in the wake of sharp decline in the U.S. market on Tuesday snapped up shares in a broad rally that stretched across most markets from Japan to London.

"U.S. stocks rebounded sharply" on Wednesday, noted Lawrence Peterman, investment director at Eden Financial in London. "Bargain hunting was evident."

In response, Tokyo's benchmark Nikkei 225 index gained 183.50 points, or 1.10 percent, to 16,860.39, a day after sliding 2.92 percent. Hong Kong's Hang Seng Index advanced 132.51 points, or 0.7 percent, to 18,969.44 after sliding 2.6 percent Wednesday.

U.S. shares fell sharply at mid-session Wednesday, but recovered to close with a slight advance. Early Thursday, U.S. stock futures fell after a disappointing wholesale inflation report from the Labor Department.

Investors in Asia closely watch Wall Street because the U.S. economy is a huge export market for the region. But some analysts were warning of a rough ride ahead because of more volatility in U.S. markets and other factors.

"The Nikkei is very likely to get back to 17,000 soon ... but the next few months could well be volatile and corporate earnings in April are going to be important," said Toshihiko Matsuno, assistant general manager at SMBC Friend Securities.

Wednesday's tumble was sparked by problems emerging among U.S. subprime mortgage lenders, who provide mortgages to people with poor credit. While these lenders make up a small part of the U.S. economy, their difficulties raised concerns about the housing market and the outlook for the broader American economy.

But with Wall Street's recovery, investors scooped up shares that had fallen to attractive levels.

In South Korea, stocks were boosted by bargain hunting and advances in neighboring markets. The Korea Composite Stock Price Index, or Kospi, closed up 1.4 percent at 1426.93. Shares were down by 2 percent the day before.

"Today's rebound was largely technical and the market is likely to take a cue for tomorrow from the U.S. markets' overnight performance," said analyst Yang Chang-Ho at Hyundai Securities.

Chinese stocks have played a key role in influencing global markets in recent weeks. Two weeks ago, Chinese shares plunged nearly 9 percent. That triggered a weeklong selloff worldwide driven by concerns about a U.S. slowdown and that stock prices were overvalued.

On Thursday, Chinese shares also rebounded as investors bought into companies with stakes in domestic banks and brokerages, which are expected to pay good dividends in a strong economy.

The benchmark Shanghai Composite Index ended up 1.6 percent at 2951.70, recovering most of Wednesday's 2 percent loss.

"We are optimistic on China's economic outlook in 2007 and thus bullish on corporate fundamentals. The government is unlikely to resort to aggressive measures that may result in an economic turnaround," said Zhang Yidong, an analyst at Industrial Securities.