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World Stocks Up After Greece Drops Referendum Plan

This article is more than 9 years old.

World stock markets rose Friday amid relief Greece's prime minister had abandoned a referendum on the country's bailout but gains in Europe were muted ahead of monthly U.S. employment figures.

Oil prices rose above $94 a barrel amid signs the U.S. economy may be improving. The dollar was higher against the euro but lower against the yen.

European stocks were mostly higher in early trading. Britain's FTSE 100 rose 0.3 percent to 5,560.45. Germany's DAX fell 0.3 percent to 6,114.04 while France's CAC-40 was 0.2 percent higher at 3,201.16.

Wall Street appeared headed toward a lower opening ahead of a closely-watched monthly employment report, with Dow Jones industrial futures down 0.1 percent at 11,959 and S&P 500 futures losing 0.2 percent at 1,252.70.

Trading ended higher in Asia. Japan's Nikkei 225 index rose 1.9 percent to close at 8,801.40. Hong Kong's Hang Seng jumped 3.1 percent to 19,842.79. South Korea's Kospi gained 3.1 percent to 1,928.41.

Mainland Chinese shares tracked advances in the region, with the benchmark Shanghai Composite Index adding 0.8 percent to 2,528.29 while the Shenzhen Composite Index gained 0.6 percent to 1,071.34. Benchmarks in Australia, Singapore, Taiwan, India, Indonesia and Thailand also rose.

The gains reversed four straight days of losses starting Monday. That's when Greek Prime Minister George Papandreou shocked financial markets by unexpectedly announcing he would call a referendum on a European austerity plan aimed at restoring the country's solvency.

Markets remain jittery about how Europe will resolve its debt crisis. The risks to the region's economy were also a clear factor in the ECB's surprise decision Thursday to cut interest rates by a quarter of a percentage point to 1.25 percent.

Analysts expect economic growth in Europe to slow in the final three months of the year or even go into reverse.

Still, Greece's decision to call off the referendum allayed concerns that it would reject the bailout plan - which could lead Greece into a massive debt default that could slam banks and other investors that were heavy purchasers of its bonds.

"The equity markets are reacting quite positively to what's happening in Europe," said Lee Kok Joo, head of research at Phillip Securities in Singapore. "There is still a lot of uncertainty, and the market is just reacting day by day to what is happening."

Investors will be closely watching the latest U.S. unemployment figures for October due to be released later Friday, Lee said.

Economists predict employers added a net total of 100,000 jobs last month, according to a survey by FactSet. That's just enough to keep up with population growth and stop the already high unemployment rate from rising.

Bargain hunting and buying fervor led to broad gains, including shares in airlines and heavy equipment. Hong Kong-listed Air China Ltd. jumped 6.8 percent, while Korean Air Lines Co. rose 2.9 percent. Japan's Komatsu Ltd., a world leader in equipment making, soared 6.9 percent.

Rising commodities prices, including industrial and precious metals, boosted mining shares. Zining Mining Group Co., China's largest gold miner, added 6.3 percent. Australia's BHP Billiton, the world's largest mining company, gained 3.9 percent while rival Rio Tinto Ltd. surged 5.3 percent. Fortescue Metals Group soared 7.9 percent.

Kirin Holdings Co., Japan's No. 2 brewer, rose 1.5 percent after announcing it has taken full control of Brazilian beverage maker Schincariol by acquiring its holding company, Kyodo News Agency reported.

The acquisition is part of Kirin's effort to expand into emerging markets, where rapid economic growth and rising demand are expected at a time when Japan's domestic beer market is shrinking.

Sony Corp., the Japanese electronics and entertainment conglomerate, tumbled 7.9 percent, after earlier this week reporting a 27 billion yen ($346 million) loss for the latest quarter and downgrading its annual earnings forecast, battered by the strong yen and poor sales of flat panel TVs.

Mainland Chinese shares in shipbuilding, development zones and nonferrous metals led the gains while shares in media and cement companies weakened after earlier gains.

"The advance was mainly due to what happened overseas. While there is some pressure of profit-taking in the short term, the gaining trend will continue," said Cai Dagui, an analyst at Ping'an Securities, based in Shenzhen.

Suzhou New District Hi-Tech Ind. Co. gained 5 percent while CSSC Jiangnan Heavy Industry Co. added 4.4 percent. Shanghai Xinhua Media Co. lost 1.9 percent.

The developments in Europe on Thursday helped send Wall Street to a second day of big gains. The Dow Jones industrial average gained 1.8 percent to 12,044.47. The S&P 500 rose 1.9 percent to 1,261.15 and the Nasdaq composite added 2.2 percent to 2,697.97.

Reports on the U.S. economy also lifted stocks by lowering fears of a new recession. The number of people who applied for unemployment benefits last week dipped to the lowest level in five weeks. The number of applications fell below 400,000 for only the third time since April.

Companies also ordered more factory goods in September for a third straight month.

Benchmark crude for December delivery was up 17 cents to $94.24 in electronic trading on the New York Mercantile Exchange. The contract rose $1.56 to settle at $94.07 a barrel on Thursday, helped by the better U.S. and European news.

In currencies, the euro fell to $1.3794 from $1.3834 late Thursday in New York. The dollar slipped to 78.05 yen from 78.09 yen.

This program aired on November 4, 2011. The audio for this program is not available.

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