Europe: Global stock markets in mixed end to volatile week

[LONDON] Stock markets rebounded in Europe and on Wall Street Friday but some stumbled in Asia, capping a volatile week as investors' concerns grow about the health of the global economy.

London's benchmark FTSE 100 index ended the day up 1.1 per cent, aided by rising oil prices, and despite poor official manufacturing and trade figures.

In the eurozone, Frankfurt's DAX 30 closed 1.0 per cent higher and the Paris CAC 40 climbed 1.35 per cent.

"The main catalyst for this growth seems to have been the strong German trade surplus figures," said Spreadex analyst Connor Campbell, noting that dealers had "quickly forgotten" disappointing French industrial output data.

And in Milan stocks closed four per cent higher boosted by several Italian banking shares including Banco Popolare and Unicredit soaring around 10 per cent.

Rising oil prices were also behind US stocks advancing on Friday with the Dow Jones Industrial Average gaining 0.35 per cent to stand at 17,603.36 points around mid-day in New York.

"The surprising large drawdown in US oil stocks lent buoyancy to oil prices which were already supported by the prospects of an imminent oil-freeze deal between Russia and the Opec," commented City Index analyst Fawad Razaqzada in London.

Then too sentiment was lifted by comments from Federal Reserve Chair Janet Yellen Thursday night that the US economy was on sound footing.

In Asia, Hong Kong ended on a high in late buying while Tokyo also recovered from a morning sell-off to close the day in positive territory thanks to the yen weakening against the dollar, giving some respite to Japanese exporters.

But Shanghai slid 0.8 per cent and Sydney shed 0.6 per cent, while Seoul, Singapore and Wellington were also sharply lower.

Dealers have taken their foot off the pedal after a March advance, with analysts saying there is a sense that central banks from Asia to the Americas are running out of options to kickstart world growth.

Last month saw the European Central Bank push interest rates deeper into negative territory in a bid to ramp up lending, a policy adopted by the Bank of Japan in January. Also, the US Federal Reserve has lowered its forecasts for raising borrowing costs this year and said it did not expect to make any move until after June.

While central banks continue to press for governments to do more to boost growth, the message is falling on deaf ears, say analysts at Capital Economics.

In Europe, "the ECB will eventually have to put its reservations aside and take more action, probably in the form of a further extension of its asset purchases," it said in a note to clients Friday.

Despite the moves to loosen monetary policy, growth remains stubbornly low and some experts think the banks' magic could be wearing off.

"We're definitely moving to a risk-off scenario and there's been a strong flight to safety," Niv Dagan, executive director at Peak Asset Management LLC in Melbourne, told Bloomberg News.

"Investors are cautious and are extremely nervous that global central bank intervention won't actually stimulate growth in the economy." Oil prices climbed as traders look ahead to next weekend's meeting of major producers, with hopes a deal to freeze output can be reached.

West Texas Intermediate was up 6.7 per cent at $39.76 per barrel and Brent gained 6.2 per cent to $41.89.

REUTERS