- The Washington Times - Monday, March 16, 2009

LONDON (AP) - European stock markets advanced Monday, led by financials after Barclays PLC became the latest major bank to say it has had a good start to 2009.

Investors were also encouraged somewhat by renewed promises by the finance ministers of leading industrialized countries, who over the weekend pledged to do more to fight the global recession.

By noon in mainland Europe, Britain’s FTSE 100 rose 2 percent to 3,829.47, Germany’s DAX climbed 1.9 percent to 4,029.31, and France’s CAC 40 jumped 2.2 percent to 2,764.77.

Shares in Barclays soared 20 percent after Britain’s third-largest bank by assets said it had had a “strong start to 2009,” without specifying further. Its announcement comes on the heels of similarly upbeat news from Citigroup and other top U.S. banks, which lifted financial stocks last week.

Other European banks saw their shares rise, including Societe Generale and BNP Paribas, adding 8.8 percent and 4.2 percent in Paris. In London, HSBC was up 3.6 percent. The bank, also listed in Asia, had earlier climbed 4.6 percent in Hong Kong after its chief financial officer said the company would not need money from the British government.

“The Barclays’ announcement this morning has proved something of a catalyst,” said Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers. “Investors have been grasping that news because it has been a while now since there’s been positive news coming through.” But he said that in respect of banking shares, there were concerns about more writedowns, and a move from credit writedowns to more traditional recessionary bad debt.

“Nonetheless it’s potentially the end of the beginning when some of the world’s largest banks say they have had a reasonable start to the year,” he added.

Also helping to ease fears about banks were promises over the weekend from finance ministers of the Group of 20 industrialized nations to do “whatever is necessary” to fix the global economy and restore a shaky financial sector still reeling from losses on bad assets.

But officials remained cool on a U.S. proposal for more coordinated government spending to stimulate economies. More details will be thrashed out at a summit of the group’s national leaders in London on April 2.

“I don’t think anyone was expecting a panacea this weekend,” said Hunter. “Perhaps there will be more meat on the bone to come out of the meeting next month.”

In Asia, stock markets also advanced, with Tokyo’s index up nearly 2 percent, on cautious optimism that government efforts to heal the financial system will reinvigorate the flagging world economy

Still, lackluster trade through most of Asia’s session outside its two biggest markets _ Japan and Hong Kong _ reflected lingering uncertainty.

Japanese financial stocks surged on reports the country’s central bank may buy their subordinated loans and bonds to bolster their capital.

But sentiment was still fragile in many markets as traders waited to see whether Wall Street would extend its four-day rally. Investors also were anticipating announcements this week from the U.S. Federal Reserve and Treasury Department about the state of the world’s largest economy and the government’s bank bailout plan.

“Investors are happy to ride a bear market rally, but many are not fully confident that anything of significance has changed,” said Kirby Daley, senior strategist at Newedge Group in Hong Kong.

U.S. stock index futures pointed to more gains on Wall Street. The Dow Jones Industrial Average futures were up 70 to 7,249, and Standard & Poor’s 500 futures rose 8.7 to 763.30.

Japan’s Nikkei 225 stock average rose 134.87 points, or 1.8 percent, to 7,704.15, after vaulting more than 5 percent on Friday. Hong Kong’s Hang Seng climbed 450.91, or about 3.6 percent, at 12,976.71.

In mainland China, Shanghai’s main index clawed back from earlier losses to rise about 1 percent. Taiwan, Indian, Australia and Singapore stock measures also rose.

South Korea’s benchmark was flat, while the Philippines’ stock measure tumbled 4.7 percent.

The region’s optimism was clouded by another round of dismal figures about Asia’s economies, hit hard by shrinking Western demand for their electronics, clothes and other exports amid the global downturn.

In Singapore, analysts slashed the country’s economic forecasts for 2009 and said the city-state would suffer a severe recession, with gross domestic product shrinking 4.9 percent this year. Meanwhile, foreign direct investment in China dropped in February as companies battered by the financial crisis pulled back.

On Friday in New York, Wall Street finished with its biggest weekly advanced since November. The Dow Jones industrial average rose 53.92, or 0.8 percent, to 7,223.98, bringing its weekly gain to a stunning 9 percent. The Standard & Poor’s 500 index rose 5.81, or 0.8 percent, to 756.55.

In oil, crude prices fell on Monday after OPEC decided not to cut production levels at its meeting over the weekend in Vienna. In European trading, benchmark crude for April delivery was off $1.83 to $44.42 a barrel on the New York Mercantile Exchange.

___

AP business writer Jeremiah Marquez in Hong Kong contributed to this report.

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