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Capital Business


Equities rally on recovery hopes

LONDON, May 19 – World stock markets posted fresh gains Tuesday on hopes that the global economy is through the worst of its slump, setting the stage for a pick-up in corporate earnings, dealers said.

In late morning trading in Europe, Frankfurt rallied 2.19 percent, Paris gained 1.46 percent and London climbed 1.24 percent.

"There has been an increased sense of optimism amongst investors that the worst of the economic downturn has passed, and this continues to lift the European markets," said City Index analyst Joshua Raymond.

In Asia, Tokyo soared 2.78 percent, Seoul advanced 2.99 percent, Sydney added 2.19 percent and Taipei gained 1.18 percent.

Hong Kong shares surged 3.06 percent amid renewed optimism for a global economic recovery and on a rally in the banking and property sectors.

Dealers welcomed comments from US Treasury Secretary Timothy Geithner, who said the economy had stabilised.

But views were mixed about whether the rally had further to run, with some analysts voicing concern that markets might be rising too quickly given the uncertainty over the global economic outlook.

London gains were capped on Tuesday after poor results from mobile phone giant Vodafone and prestigious retailer Marks & Spencer.

Vodafone shares slid 0.71 percent to 126.55 pence after the group said annual net profit more than halved after massive charges against its business in the global economic downturn.

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M&S shares sank 6.71 percent to 316.50 pence after it said annual net profit slumped nearly 40 percent and cut its dividend by a third due to an "uncertain economic outlook."

In Wall Street trade on Monday, better-than-expected earnings from US home improvement retailer Lowe\’s helped ease economic anxiety, lifting the Dow Jones Industrial Average 2.85 percent.

Geithner sounded upbeat Monday, saying "things have clearly stabilised" since the world\’s largest economy sank into recession in December 2007. But he cautioned that a recovery will be "bumpy."

Analysts said a lot of optimism had already been priced into the market, including expectations of an economic recovery in the second half of this year, so there is a risk that investors will be disappointed.

Investors kept a close eye on India\’s shares, which fell more than three percent in early trade, a day after the re-election of the Congress party-led coalition brought a record single day gain of 17.24 percent on hopes of reform.

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