London: World stock markets rose strongly on Monday even though General Motors Corp. has filed for bankruptcy protection as investor optimism was boosted by strong manufacturing surveys around the world.
In Europe, the FTSE 100 index of leading British shares was up 67.34 points, or 1.5%, at 4,485.28, while France’s CAC-40 was up 69.06, or 2.1%, to 3,346.72 despite a fall in Air France-KLM SA’s share price amid worries about the fate of a missing Brazil-Paris flight. Germany’s DAX surged 145.61, or 3%, to 5,086.43 though analysts said the gains may have been exaggerated by lighter volumes due to a holiday.
Earlier in Asia, Japan’s Nikkei 225 stock average, which has surged 37% since early March, closed up 155.25, or 1.6%, to 9,677.75, while Hong Kong’s Hang Seng index shot up 4% to 18,888.59.
The bright start to the week, particularly in commodity-related stocks, was sparked by surveys in Europe and Asia showing that the manufacturing sector was on the mend if not quite in full recovery mode. A similar survey later from the US is also expected to echo findings elsewhere.
In China, brokerage CLSA Asia-Pacific Markets said its monthly purchasing managers index (PMI)—a broad gauge of activity—rose to 51.2 in May from April’s 50.1. Anything above 50 indicates an expansion. The state-sanctioned China Federation of Logistics and Purchasing said its PMI eased slightly to 53.1 from April’s 53.5 but still showed activity expanding.
Meanwhile, data provider Markit found that its manufacturing PMI for 16 countries that use the euro was revised up to a seven-month high of 40.7 in May from the previous estimate of 40.5, while the Chartered Institute of Purchasing and Supply said its PMI for Britain rose for the third month running to 45.4 in May from 43.1 in April.
Analysts expect the Institute for Supply Management to report that its main PMI rose to 42.0 in May from April’s 40.1. Hopes of an even bigger rise have contributed to mounting optimism ahead of Wall Street’s open. Dow futures were 113, or 1.3%, higher at 8,601, while the broader Standard and Poor’s 500 futures rose 14.3, or 1.6%, to 932.50.
Despite a recent lull, stocks around the world have rallied strongly over the last few weeks, with some major indexes moving into positive territory for the year. The trigger for the gains has been better-than-expected economic news, particularly in the US, fuelling an increase in appetite for risk on hopes that the global recession is receding.
Elsewhere in Asia, China’s Shanghai benchmark surged 3.4% to 2,721.28, while South Korea’s Kospi rose 19.21 points to 1,415.10. Australia’s index advanced 2% and Singapore’s market climbed 2.2%.
Stephen Wright in Bangkok contributed to this story.