Wall Street and Europe edge up

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Main stock exchange indexes trade with a positive trend. In New York, Dow Jones rises 0.9 per cent; S&P500, 1 per cent; and NASDAQ, 1.2 per cent. In European markets, Madrid earns 0.6 per cent; London, 2.1 per cent; and Paris, 1.8 per cent. Tokyo's Nikkei average closed up 0.8 per cent.


Asian stocks rose to their highest in almost three weeks on Wednesday as an export-boosting rally in the dollar helped investors shrug off worries about the weak U.S. economy and tight credit markets.

European shares were set for a firmer open, helped by a report in the Daily Telegraph newspaper that the UK government might nationalise Northern Rock if the struggling lender fails to reach a deal with a private buyer.

"The impact is similar to what happened after the report that Citi was getting funding, at least in the minds of the market, and it's setting off some short-covering," said Yutaka Miura, senior technical analyst at Shinko Securities in Japan.

Commodity prices also steadied after recent declines, with oil prices finding support above $88 a barrel ahead of a meeting of OPEC producers and after a brutal 10 percent fall in the past two weeks.

Caution ahead of Friday's U.S. non-farm payrolls and consumer sentiment reports, the last major pieces of data before next week's interest rate decision from the Federal Reserve, capped stock market gains and prompted some profit-taking on government bonds, which have rallied to multi-month highs in recent weeks.

Markets expect the Fed will cut borrowing costs, perhaps by 50 basis points, to shore up the economy in the face of a credit crunch that has dried up money market funds, slowed takeover activity and hammered profits of financial companies.

Tokyo's Nikkei average closed up 0.8 percent, while MSCI's measure of other Asia Pacific stocks added 0.4 percent.

The Nikkei is down almost 10 percent this year, while the Asia ex-Japan index is still up 35 percent despite November's sell-off.


In a sign of lingering unease about the credit problems and fallout from a deep U.S. housing slump, JPMorgan lowered its 2008 earnings estimates for major U.S. banks, sending Wall Street lower overnight.

Asian bank stocks fell in sympathy, with HSBC down 1.3 percent in Hong Kong and South Korea's Woori Finance Holdings off 2.3 percent. Citigroup's Tokyo shares fell 1.6 percent.

But technology stocks rose on hopes that earnings will continue to grow at a healthy pace.

LG Electronics jumped 7 percent after Citigroup forecast the world's fifth-largest mobile phone maker was likely to post strong quarterly profits.

Oil and industrial metals recouped some losses after overnight falls, with oil edging up ahead of a decision from OPEC on production and the release of U.S. oil inventory data, both due later in the day.

U.S. light crude traded up 17 cents at $88.49 a barrel, still more than $10 below an all-time high of $99.29 a barrel earlier this month, while copper rose 1 percent in Shanghai trade.


A rally in the battered dollar lent support to commodity prices and to Asian exporters.

The dollar rose more than 0.5 percent against the yen trading at 110.35 yen against a low last month near 107 yen. It also edged up against the euro to trade at $1.4755.

Sterling trimmed losses against the dollar and rose versus the yen on the Northern Rock report.

"We don't yet know how much the British government's plan will help solve the credit problems," said a trader at a big Japanese bank. "But at least the report made investors believe that authorities are taking a step forward in tackling the troubles."

The Australian dollar weakened after the country's central bank held interest rates at 6.75 percent, as expected, and said the turmoil in global credit markets was clouding the outlook for the world economy.

A surprise rate cut from the Bank of Canada overnight weighed on the Canadian dollar and reinforced the perception that central banks are becoming more worried about the credit crunch.

It also heightened expectations the Bank of England could ease monetary policy this week, although the European Central Bank, which also meets this week, is seen unlikely to cut rates due to inflation concerns.

Despite the prospect of lower international interest rates, Japanese government bond markets took a breather after a buying spree that pushed the lead JGB futures contract to a 22-month high in the previous session.

December futures fell 0.48 points to 137.17.

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