G20 Another Market Talk Up

Global stock markets rallied Friday, helped by firmer oil prices, as finance ministers and central bankers from the world’s leading economies gathered to discuss recent financial turmoil.

As G20 ministers met in Shanghai, markets were awaiting the latest US growth data for more clues on the state of the world’s biggest economy.

Eurozone indices were heading toward 2.0-percent gains around midday after a strong showing by stocks on Asian bourses.

“Investors are cautiously optimistic as we see out the week, but there will no doubt be many more twists and turns on the road ahead,” said Mike McCudden, head of derivatives at stockbroker Interactive Investor.

“With the G20 summit… and high expectations of bullish comments from the forum, investors are taking their cue to move with the hot air and push stocks higher.

“The oil price is the major motivator for movement,” he added.

Benchmark oil contract Brent North Sea crude rose back above 36 a barrel on Friday, boosting shares in energy companies.

– Eyes on Shanghai –

Market-wide rallies came as officials from the Group of 20 industrialised nations gathered for a two-day meeting, with China’s sagging growth expected to loom over the discussions.

Shanghai’s main stocks index rose almost one percent Friday after the head of the People’s Bank of China said the economy was strong and signalled authorities could do more to help stimulate growth.

Shanghai had plunged more than six percent on Thursday, hit by tightening liquidity and concerns a rally that has added 10 percent since mid-January was overdone.

Chinese shares have been on a rollercoaster ride since a debt-fuelled bubble burst last year, while cooling growth in the key importer of raw materials has sent commodity and energy prices spinning.

Pressure has meanwhil been mounting for central banks to let loose their monetary firepower to stimulate growth and reassure investors, after financial markets posted one of the worst starts to the year in living memory.

Japan has already adopted negative interest rates, the European Central Bank has embarked on its own huge stimulus programme, and the US Federal Reserve has signalled possible delays to interest rate rises.

But German Finance Minister Wolfgang Schaeuble set the stage for disputes at the Shanghai meeting when he said Europe’s largest economy opposes any G20 fiscal stimulus package.

In Japan, news that inflation fell to zero in January also raised expectations the Bank of Japan could ramp up its massive central bank bond-buying programme.

The news is a fresh blow for Prime Minister Shinzo Abe after three years of trying to kick-start growth with a raft of policies.

Back in Europe, Frankfurt stock exchange operator Deutsche Boerse on Friday revealed that in the proposed tie-up with the London Stock Exchange the merged group would be based in the British capital, adding however that a potential ‘Brexit’ could jeopardise the plans.

Britain is gearing up for a referendum on June 23 when the country must decide whether to remain part of the European Union or exit the bloc.

– Key figures around 1145 GMT –

London – FTSE 100: UP 1.2 percent at 6,083.00 points

Frankfurt – DAX 30: UP 1.9 percent at 9,508.90

Paris – CAC 40: UP 1.7 percent at 4,321.20

EURO STOXX 50: UP 1.8 percent at 2,929.00

Tokyo – Nikkei 225: UP 0.30 percent at 16,188.41 points (close)

Shanghai – composite: UP 0.95 percent at 2,767.21 points (close)

Hong Kong – Hang Seng: UP 2.52 percent at 19,364.15 points (close)

New York – Dow: UP 1.3 percent at 16,697.29 points (close)

Euro/dollar: DOWN at 1.1019 from 1.1023 on Thursday

Dollar/yen: UP at 112.82 yen from 112.15 yen on Thursday

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