World markets buoyed by Bank of America move

World markets buoyed by Bank of America move

London: World stock markets rose on Thursday, with Japan’s Nikkei up around 4%, after Bank of America Corp. (BoA) said it will repay $45 billion (Rs2.08 trillion) of government bailout money and as investors prepared for a crucial policy statement from the European Central Bank.

In Europe, the FTSE 100 index of leading British shares was up 37.42 points, or 0.7%, at 5,364.81 while Germany’s DAX rose 56.86, or 1%, to 5,838.54. The CAC-40 in France was 35.98, or 1%, higher at 3,831.90.

Earlier in Asia, Japanese stocks were boosted by a fall in the value of the yen which, if sustained, could help exporters—Japan is particularly dependent on exporting its cars and electronics for its economic growth.

The Nikkei 225 stock average jumped 368.73 points, or 3.8%, to 9,977.67.

Sentiment was mainly buoyed by the news that Bank of America intends to repay money it received during the height of the credit crisis last year and after its purchase of Merrill Lynch earlier this year to escape the heightened supervision that goes along with it.

“The significance of the BoA move is that they are in a position to be able to do it," said Kit Juckes, chief economist at ECU Group.

“This, surely, is a massive endorsement of the monetary policies we have seen in place for the last year," he added.

Attention later will focus on the European Central Bank, which will unveil its latest policy statement and economic forecasts.

Analysts expect a number of significant decisions and announcements from the central bank for the 16 countries that share the euro—even though the benchmark rate will likely stay at the record low of 1% for months to come.

In particular, they will be looking to see what President Jean-Claude Trichet says in his press conference about liquidity measures introduced to keep the banking system from collapse and to limit the scale of recession.

Investors will then turn their attention to Friday’s US nonfarm payrolls report for November—data that often sets the tone in the markets for a week or two.