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World stock markets and oil higher amid thin holiday trade on signs US economy is improving
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By Alex Kennedy, The Associated Press
SINGAPORE - World stock markets rose Friday and oil jumped above $100 a barrel on signs the U.S. economy is improving.
European benchmarks opened higher after gains in Asia. Germany's DAX rose 0.8 per cent to 5,899.02 and France's CAC 40 gained 1.0 per cent to 3,102.54. Britain's FTSE 100 was up 0.7 per cent to 5,493.22.
Futures augured an advance on Wall Street. Dow futures were up 0.5 per cent at 12,159 and S&P 500 futures were higher by 0.6 per cent at 1,256.10.
Investors have been cheered in recent weeks by evidence of a rebound in the U.S. — the world's biggest economy and a crucial export market for many countries in Asia.
The number of people applying for unemployment benefits dropped last week to the lowest level since April 2008, the third week in a row that applications fell. The Conference Board reported that its measure of future economic activity jumped last month, the second straight gain.
Investors were also encouraged by an agreement in the U.S. Congress to extend a payroll tax cut for two months.
Oil futures climbed above the $100 mark as improved growth in the U.S. is expected to boost demand for crude.
China's benchmark in Shanghai gained 0.9 per cent to 2,204.78 and Hong Kong's Hang Seng rose 1.4 per cent to 18,629.17. Japan's financial markets were closed for a public holiday.
Australia's S&P/ASX 200 jumped 1.2 per cent to 4,140.40 in an abbreviated session. Seoul's Kospi added 1.1 per cent to 1,867.44 and Singapore rose 0.4 per cent to 2,675.12.
Chinese shares were pushed higher by the announcement of government plans to begin construction of as many as 8 million subsidized homes, half of which should be completed next year. Shares in cement, power, and real estate companies led gains.
Traders are also anticipating new policies to encourage lending and economic growth.
"Investors are expecting possible further monetary easing measures, like reducing bank reserve requirements," said Cai Dagui, an analyst at Ping'an Securities in Shenzhen.
Trading volume is normally low during the next week as many investors take vacations over Christmas and New Year. Most global markets are closed Monday for Christmas.
Credit ratings agency Fitch said it expects growth in Asia's developing economies will slow slightly next year but still expand by a robust 6.8 per cent, which should help bolster the region's wealthier nations.
"Emerging Asia's resilience provides some support for high-income Asian countries relative to other advanced economies," Fitch said in a report.
Other analysts are more pessimistic. HSBC is forecasting Europe's economy will contract next year by 1 per cent while the U.S. grows a weak 1.5 per cent as Europe's debt crisis undercuts business confidence.
"Despite signs of greater urgency to deal with the problem, investors remain mostly unconvinced," HSBC said in a report. "This loss of faith is reminiscent of the collapse in confidence in 2008, when the wheels came off the global economy."
"Back then, forecasters completely failed to grasp the gravity of the situation," HSBC said. "The same may be true today."
On Thursday, the Dow Jones Industrial Average rose 0.5 per cent while the broader S&P 500 index gained 0.8 per cent.
Benchmark crude for February delivery was up 58 cents to $100.11 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 86 cents to finish at $99.53 on Thursday.
In London, Brent crude was steady at $107.87 on the ICE futures exchange.
The euro was up 0.1 per cent at $1.3071. The dollar fell 0.2 per cent to 78.04 yen.
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