Global recovery hopes shore up markets

LONDON - Japanese shares recovered the previous day's big losses to lead world markets higher on yesterday as investor sentiment recovered amid hopes for the global economy.

The turnaround, which began on Tuesday after the US posted another month of retail sales growth, was reinforced by a note of optimism from the World Bank as well as strong earnings from Bank of America.

The World Bank said there were signs that the global economy has turned a corner after five years of financial crises and recessions.

"The World Bank, along with the IMF and OECD, are the main providers of global economic forecasts and so their assessment and projections provide an important guide for the financial markets," said Neil MacKinnon, global macro strategist at VTB Capital.

In Europe, the FTSE 100 index of leading British shares was up 0.7 percent at 6,816 while Germany's DAX rose 2 percent to 9,728. The CAC-40 in France was 1.2 percent higher at 4,324.

In the US, the Dow Jones industrial average was up 0.6 percent at 16,467 while the broader S&P 500 index rose 0.5 percent to 1,848. Sentiment on Wall Street was helped by Bank of America, which saw its share price climb 3.8 percent in early trading after it reported a profit of $3.44 billion in the October to December period, way up on the $732 million it made a year earlier.

The gains in Europe and the US were dwarfed by the 2.5 percent rise in Japan's Nikkei 225 to 15,808.73. That helped the index recover much of its 3.1 percent loss on Tuesday.

"Earnings from banks so far have been relatively well received by the markets," said Craig Erlam, market analyst at Alpari.

A softer yen helped, particularly the share prices of exporters such as Toyota and Sony — a lower currency potentially helps them in international markets.

The dollar, which has been on the retreat for much of the period since last Friday's weak US nonfarm payrolls data, was up 0.4 percent at 104.55 yen, while the euro fell 0.5 percent to $1.3598.

Elsewhere in Asia, Hong Kong's Hang Seng rose 0.5 percent to 22,902 and South Korea's Kospi added 0.4 percent to 1,953.28. The Shanghai Composite Index, however, lost 0.2 percent to 2,023.35 as investors anticipated an influx of new listings.