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European stocks end higher on US data boost

 A woman walks in front of the electronic stock board of a securities firm in Tokyo, Japan, Tuesday, Aug. 25, 2009. The benchmark Nikkei 225 stock ave...
 A man walks in front of the electronic stock board of a securities firm in Tokyo, Japan, Tuesday, Aug. 25, 2009. The benchmark Nikkei 225 stock avera...

Japan Markets

A woman walks in front of the electronic stock board of a securities firm in Tokyo, Japan, Tuesday, Aug. 25, 2009. The benchmark Nikkei 225 stock ave...

Japan Markets

A man walks in front of the electronic stock board of a securities firm in Tokyo, Japan, Tuesday, Aug. 25, 2009. The benchmark Nikkei 225 stock avera...

European stocks closed higher Tuesday, helped by a rise on Wall Street after data showed American consumer confidence and house prices _ two crucial components of the world's largest economy _ were finally edging up.
Germany's DAX was up 37.34 points, or 0.7 percent, at 5,557.09 while Britain's FTSE-100 rose 20.57 points, or 0.4 percent, to 4,916.80. France's CAC-40 rose 28.44 points, or 0.8 percent, to 3,680.61.
Although European indexes had been lower in the morning _ spooked by losses in Asia _ they recovered as Wall Street opened, with the Dow industrial average rising 79.36 points, or 0.8 percent, to 9,588.64 and the Standard & Poor's 500 gaining 8.13 points, or 0.8 percent, to 1,033.70.
The upward momentum came from U.S. data, first from the Case-Shiller index of house prices, which showed the first increase in three years. The separate FHFA index also pointed to rising property prices.
Because so much of the global economic downturn was based on the bursting of the U.S. housing bubble, a stabilization in that market is widely seen as crucial to a lasting recovery.
Patrick Newport, U.S. economist at IHS Global Insight, said rising house prices would not only help banks holding toxic subprime mortgage-related assets, but also boost home sales and help consumer spending by increasing households' wealth.
Further helping investor sentiment was the Conference Board's consumer confidence indicator, which rose more than expected in August, to 54.1 points from 47.4 points the previous month. Improvements are watched closely as U.S. consumer spending accounts for a massive 70 percent of the U.S. economy and 20 percent of the global economy.
The stronger data helped markets look past the jitters in Asia, where Shanghai's main index lost 2.6 percent after Chinese Premier Wen Jiabao said his country's economic recovery lacked a solid foundation.
Analysts cautioned, however, that stock market movements were still fickle due to low trading volumes during the summer months and that the U.S. data was still fundamentally weak.
"The large inventory overhang and the weakness in mortgage applications are likely to constrain the recovery in (house) prices," said Paul Dales, U.S. economist at Capital Economics.
He also noted that consumer confidence remained well below historical averages, even lower than before investment bank Lehman Brothers collapsed last year.
Still, with investors needing reassurance that the global economic recovery is more than just a short-term phase, the improvements helped markets rise.
"The bigger picture remains one of a gradual improvement in the global economy," with investors cautious about assuming a more rapid recovery, said Daragh Maher, analyst at Calyon.
"A changeable market mood looks set to continue well past the summer doldrums."
Meanwhile, news that President Barack Obama will announce the reappointment of Ben Bernanke to a second four-year term as Federal Reserve chairman was widely expected but largely welcomed.
Dales said Bernanke's awareness of the dangers of deflation suggest U.S. interest rates will not be rising quickly during the next few years of his tenure, a notion which would reassure markets.
Earlier in Asia, the Shanghai Composite Index slid as much as 5 percent at one point before paring losses. It closed down 77.63, or 2.6 percent, at 2,915.80, while Hong Kong's Hang Seng was off 0.5 percent at 20,435.24.
Japan's Nikkei 225 stock average lost 83.69 points, or 0.8 percent, to 10,497.36. South Korea's Kospi lost 0.7 percent, Taiwan's market edged down 0.4 percent and India's Sensex was up 0.3 percent.
Crude oil prices fell in European afternoon trading, with the benchmark crude for October delivery down 32 cents at $74.05. The contract gained 48 cents overnight.
The dollar rose to 94.71 yen from 94.48 yen. The euro rose to $1.4332 from $1.4297.
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Associated Press Writer Jeremiah Marquez in Hong Kong contributed to this report.


Updated : 2021-08-03 22:02 GMT+08:00