London: World markets rose sharply Monday amid further hopeful signs about the economic recovery. Commodity stocks led the charge, particularly in London, after gold hit record high amid renewed dollar weakness.
European stocks tracked their Asian counterparts higher, with the FTSE 100 index of leading British shares up 88.99 points, or 1.7%, at 5,340.40. Germany’s DAX rose 91.74, or 1.6%, at 5,754.89 and the CAC-40 was 57.24, or 1.5%, higher at 3,786.60.
Wall Street was poised to open higher after a strong end to last week. Dow futures were up 91 points, or 0.9%, at 10,394 while the broader Standard and Poor’s 500 futures rose 11.50, or 1.1%, to 1,101.60.
Extra shine: The falling dollar has made gold more attractive to foreign investors; as a result, commodity stocks are heavily in demand. Toru Hanai / Reuters
Sentiment in Europe was buoyed by data indicating that the economic recovery is gathering pace in the 16 countries that use the euro.
The monthly composite purchasing managers index—a broad gauge of business activity in the manufacturing and services sector—rose to 53.7 in November from October’s 53.
Any reading above 50 indicates expansion and the bigger the difference from 50 the greater the expansion. The figures confirmed that the recession in the eurozone ended in the third quarter, though growth was a muted 0.3%.
“November’s rise suggests that the eurozone economy has gained a bit more momentum in Q4, but the recovery remains of the steady, rather than the spectacular, variety,” said Ben May, European economist at Capital Economics.
Much of Monday’s activity centred on commodity stocks as the price of gold rose 1.7% to a new record of $1,167.35 (Rs54,281.76) an ounce (1oz is 28.35g). Gold has garnered renewed support as the recent rally in the dollar ran out of steam after US Federal Reserve official James Bullard said the central bank should continue to buy mortgage-backed securities after the March expiration date.
Any suggestion that the Fed will maintain its extraordinary monetary policy measures for longer than previously anticipated heaps pressure on the dollar—by late morning London time, the euro was up 0.8% at $1.4971.
The falling dollar makes gold more attractive to international investors and as a result, commodity stocks were heavily in demand, particularly on London’s FTSE 100, where a number of resource companies are listed—near the top of the leaderboard were Eurasian Natural Plc, Xstrata Plc and Rio Tinto Plc.
Attention later will focus on US existing home sales figures for October.
Analysts are hopeful the figures will not disappoint after a mixed series of housing data recently, and are forecast to have risen around 2.5% to an annual rate of 5.7 million units.
Kelly Olsen in Seoul, South Korea contributed to this story.