World stocks jump on Fed pledge for US economy

BANGKOK (AP) ? World stock markets bounded higher Friday after investors got just what they wanted ? big moves by the Federal Reserve to help the U.S. economy out of its funk.

The Fed said Thursday it would buy $40 billion of mortgage securities a month until the economy improves. It also pledged to extend super-low interest rates into 2015.

European stock markets opened sharply higher. Britain's FTSE 100 rose 1.4 percent to 5,900.22. Germany's DAX gained 1.2 percent to 7,398.26 and France's CAC-40 added 1.6 percent to 3,559.28.

Wall Street looked set to post gains, with Dow Jones industrial futures rising 0.3 percent to 13,484. S&P 500 futures gained 0.3 percent to 1,454.80.

Asian stock markets staged big rallies. Hong Kong's Hang Seng surged 2.9 percent to 20,629.78, a level it hasn't seen since early May.

Japan's Nikkei 225 index jumped 1.8 percent to 9,159.39 and South Korea's Kospi vaulted 2.9 percent to 2,007.58.

Australia's S&P/ASX 200 added 1.2 percent to 4,390. Benchmarks in Singapore, Taiwan, Indonesia and New Zealand also rose. Mainland China's Shanghai Composite Index gained 0.6 percent to 2,123.85 and the smaller Shenzhen Composite Index edged up 0.1 percent to 889.72.

The Fed "is trying to convey to financial market participants that they can count on low interest rates and accommodative monetary policy for a long time and not to expect a reversal of policy in reaction to modest improvement in GDP growth or in the unemployment rate," analysts at HSBC Global Research said in a commentary.

The Fed is under pressure to act because the U.S. economy is still growing too slowly to reduce high unemployment. The unemployment rate has topped 8 percent every month since the recession officially ended more than three years ago.

In August, job growth slowed sharply. Employers added just 96,000 jobs, down from 141,000 in July and well below what is needed to bring relief to the more than 12 million who are unemployed.

The unemployment rate did fall to 8.1 percent from 8.3 percent. But that was because many Americans stopped looking for work, so they were no longer counted as unemployed.

The Fed's latest actions came a week after the European Central Bank announced its most ambitious plan yet to ease Europe's financial crisis by buying unlimited amounts of government bonds to help countries manage their debts.

Analysts said economy-bolstering moves by authorities in the U.S., Europe and China bode well for markets at least in the short-term.

"It certainly seems like sentiment is largely positive now," said Stan Shamu of IG Markets in Melbourne, Australia. "I think everyone will be much happier knowing the Fed will support a recovery."

Among individual stocks, Australia's Fortescue Metals said it halted trading of its shares until Tuesday after media reports the company's finances were stretched due to falling iron ore prices.

Gold shares climbed after the price of the precious metal surged. Hong Kong-listed Zijin Mining Group, China's largest gold miner, soared 11.4 percent. Newcrest Mining, Australia's largest gold miner, jumped 7.3 percent.

Benchmark oil was up $1.32 to $99.63 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.30 end at $98.31 per barrel on the Nymex on Wednesday.

In currencies, the euro rose to $1.3037 from $1.2985 late Thursday in New York. The dollar rose to 77.73 yen from 77.45 yen.

Source: http://news.yahoo.com/world-stocks-jump-fed-pledge-us-economy-091101686--finance.html

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