World markets up amid US employment hopes

By PAN PYLAS AP Business Writer

LONDON (AP) - World stock markets rallied hard Thursday as investor sentiment was boosted by a strong set of U.S. housing data and hopes about a pickup in the pace of U.S. jobs creation.

In Europe, Britain's FTSE 100 index was up 104.61 points, or 2 percent, to 5,255.93, while Germany's DAX rose 106.82 points, or 1.8 percent, to 6,088.02. The CAC 40 index in France rose 90.99 points, or 2.6 percent, to 3,592.49.

Wall Street was also poised to extend Wednesday's gains - Dow futures were up 62 points, or 0.6 percent, at 10,294 while the broader Standard & Poor's 500 futures rose 7.6 points, or 0.7 percent, to 1,104.30.

On Wednesday, an upbeat report on U.S. pending home sales stoked hopes that the housing market is turning around, helping the Dow Jones industrial average to post its third-best day of the year. Its 2.3 percent advance also helped Asian stocks move higher, though Chinese shares were dogged by worries about an economic slowdown in the country.

Nevertheless, investors seem relieved to get back to buying after a dismal month of trading in May, when stocks were pounded by concerns that spending cuts in Europe would hobble a recovery in the global economy.

"For the time being an air of opportunism does seem to be washing over the market with equities looking a little on the cheap side," said Ben Potter, research analyst at IG Markets.

Whether that opportunism - even BP PLC is up 4 percent Thursday, having slumped by nearly a fifth over the last couple of days amid worries about the oil spill in the Gulf of Mexico - continues could well hinge on upcoming U.S. jobs data.

The key piece of data Thursday will likely be the monthly U.S. private payrolls report from ADP. Investors will be particularly keen to see if it can reinforce recent signals that a jobs recovery of sorts is taking place in the U.S., ahead of the monthly government report on Friday.

The official nonfarm payrolls data often set the tone in stock markets for a week or two after their release. At the moment, the consensus is that the Labor Department will report that nearly 200,000 jobs were created in May.

The rebound in optimism Thursday was also evidence in the foreign exchange markets, where the euro pushed back up towards the $1.23 mark having fallen to a four-year low earlier this week of $1.2112.

However, as in the stock markets, much may well hinge on the jobs figures from the U.S.

A strong set of numbers over the coming couple of days will further highlight the growth divergence between the U.S. and the 16 countries that use the euro - that's important because it would likely prompt traders to price in earlier than expected interest rate increases from the U.S. Federal Reserve.

"Strong U.S. data may be enough to sink the euro," said Daragh Maher, deputy head of global foreign exchange strategy at Credit Agricole.

Earlier in Asia, Japan's benchmark Nikkei 225 stock index climbed 3.2 percent to 9,904.92, South Korea's Kospi gained 1.7 percent to 1,658.31 and Hong Kong's Hang Seng was 1.8 percent higher at 19,830.59. Shares in Australia, Taiwan and Singapore also advanced. The exception in Asia was the benchmark Shanghai Composite Index, which fell 18.77 points, or 0.7 percent, to close at 2,552.66.

The firmer tone in the stock markets was evident in oil prices, too - benchmark crude for July delivery was up $1.28 at $74.14 a barrel in electronic trading on the New York Mercantile Exchange.

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Associated Press Writer Pamela Sampson in Bangkok contributed to this report.