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World markets surge as banks return to favor

 A man walks in front of the electronic stock board of a securities firm in Tokyo, Japan, Tuesday, March 10, 2009. Japanese stocks continued their sli...
 A man walks in front of the electronic stock board of a securities firm in Tokyo, Japan, Tuesday, March 10, 2009. Japanese stocks continued their sli...
 A woman checks out stock price update on the electronic stock board of a securities firm in Tokyo, Japan, Tuesday, March 10, 2009. The Nikkei 225 sto...

Japan Markets

A man walks in front of the electronic stock board of a securities firm in Tokyo, Japan, Tuesday, March 10, 2009. Japanese stocks continued their sli...

Japan Markets

A man walks in front of the electronic stock board of a securities firm in Tokyo, Japan, Tuesday, March 10, 2009. Japanese stocks continued their sli...

APTOPIX Japan Markets

A woman checks out stock price update on the electronic stock board of a securities firm in Tokyo, Japan, Tuesday, March 10, 2009. The Nikkei 225 sto...

Most of the world's stock markets surged Tuesday with financial stocks enjoying a rare day in the sun amid tentative hopes that banks may be over the worst after a leaked memo from Citigroup Inc.'s boss indicated the U.S. banking giant was performing better than at any time since the third quarter of 2007.
The FTSE 100 index of leading British shares closed up 172.83 points, or 4.9 percent, at 3,715.23 while Germany's DAX ended 194.95 points, or 5.3 percent, to 3,886.96. France's CAC-40 was 144.39 points, or 5.7 percent, higher at 2,663.68.
On Wall Street, the Dow Jones industrial average spiked 308.24 points, or 4.7 percent, at 6,855.29 while the broader Standard & Poor's 500 index pushed 37.08 points, or 5.5 percent, higher to 713.61.
Earlier, most Asian stocks rose, though Japan's Nikkei closed at a new 26-year low.
The catalyst for Tuesday's strong rally was a leaked letter from Citigroup's chief executive Vikram Pandit, in which he told the company's global employees that the bank had an operating profit of $8.3 billion before taxes and special items through February, its best performance since the third quarter of 2007.
Even though Pandit did not say how large the special items, such as credit losses and writedowns, are, the memo was enough to spark renewed buying. The letter was written to reassure employees as the New York-based bank's stock has taken a beating in recent weeks as the government is increasing its stake in the bank.
Financial stocks were up around the world, with Citigroup itself up a massive 29 percent at the open, while Bank of America Inc., considered by most investors as the next most vulnerable U.S. bank, up 25 percent. JP Morgan Chase & Co. surged 17 percent too.
In Germany, Deutsche Bank AG jumped 17 percent while Commerzbank AG was 13 percent higher. In Britain Barclays PLC spiked 10 percent, though ongoing concerns about its capital position as it negotiates the terms of an insurance deal for risky assets on its balance sheet with the British government may have tempered its gains. Earlier in the session, Barclays had been up nearly 20 percent.
And in Asia, HSBC rebounded 14 percent after the government said it was probing the massive 24 percent drop in the company's shares the day before.
Despite Tuesday's optimism, investors remain watchful about developments in the world's banks, which have seen their balance sheets ravaged by the financial crisis and the deepening global economic downturn.
"It is going to take more than a single day of positive news for investors to shake off the apathy they seem to have when it comes to buying shares," said Anthony Grech, market strategist at IG Index.
However, he said Tuesday's strength may suggest that for a couple of days at least "we may be spared further falls."
The problems facing the global economy are acute and U.S. Federal Reserve chairman Ben Bernanke warned Tuesday that the U.S. recession would only end this year if the authorities are successful in getting financial markets to operate more normally again.
"Our reticence to turn more optimistic on equities is that we just can't see earnings turning up any time soon," said John Higgins, an analyst at Capital Economics.
Earlier most Asian stock markets climbed, but Japanese shares sank to a new 26-year closing low amid ongoing worries about the economic crisis. Japan's Nikkei 225 stock average fell 31.05 points, or 0.4 percent, to 7,054.98 _ the lowest closing level since Oct. 6, 1982 when the index finished at 6,974.35
Meanwhile, Hong Kong stocks led the region's advance, with the Hang Seng closing up 349.47, or 3.1 percent, to 11,694.05.
South Korea's Kospi added 1.9 percent to 1,092.20, while Shanghai's benchmark advanced 1.9 percent. Australian and Singapore benchmarks also rose. Markets in Malaysia and the Philippines also were lower.
Meanwhile, oil prices were steady, with benchmark crude for April delivery down a solitary cent at $47.96. On Monday, the contract rose $1.55 to settle at $47.07 a barrel on the New York Mercantile Exchange as investors anticipated another OPEC production cut.
In currencies, the dollar fell 0.4 percent 98.35 yen while the euro was 1.2 percent higher at $1.2752.
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AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.


Updated : 2021-02-26 23:32 GMT+08:00