World stock markets gain ahead of global summit

BANGKOK, Thailand (AP) _ Asian and European markets gained in the wake of Wall Street's overnight surge as investors bought up beaten-down shares and world leaders gathered in Washington to discuss ways to tackle the global financial crisis.

Japan's benchmark Nikkei 225 stock average rose 223.75 points, or 2.7 percent, to 8,462.39, and Hong Kong's Hang Seng advanced 321.31, or 2.4 percent, to 13,542.66.

Mainland China's key index rose 3.1 percent, while markets in Australia and Singapore rose above 1 percent. South Korea's Kospi ended flat after giving up an early rise.

The advance across most of Asia followed a volatile Thursday on Wall Street with an abrupt turnaround muscling the Dow Jones industrial average up more than 550 points, or 6.7 percent, to 8,835.25 after a stream of negative economic and corporate news drove the index to its lows for the year.

"Professional investors are taking advantage of dips like we've seen in the past few days as a short-term trading strategy but we are not seeing long-term money coming back into the market," said Mahendran Arjuna, HSBC Private Bank's chief investment strategist for Asia in Singapore.

"From a fundamental perspective, markets are at levels we've seen in previous recessions but this is not to do with fundamentals," he said. "It's to do with liquidity and investors have been rushing for the exit, selling shares because they need cash."

In early European trading, Britain's FTSE 100 and Germany's DAX were both up 3 percent, while France's CAC 40 was up nearly 2 percent.

But U.S. stock futures declined, suggesting Wall Street would retreat Friday morning. Dow futures were down 128 points, or 1.5 percent, to 8,703, while Standard & Poor's 500 futures were down 13.4, or 1.5 percent, at 894.3.

Some analysts said investors were positioning themselves ahead of the meeting Friday and Saturday of Group of 20 leaders in Washington. The gathering could bring decisions on mending the troubled global financial system but is unlikely to produce any quick cure for the slowdown gripping major developed economies.

The G-20 includes Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United States and the European Union.

The meeting comes as some experts said world's developed countries probably have already entered a recession. The Paris-based Organization for Economic Cooperation and Development said gross domestic product for its 30 market democracies would shrink 1.4 percent this quarter and keep contracting until the middle of next year.

HSBC's Mahendran said it's likely to be many months before some semblance of normality returns to global equity markets.

"Investors are waiting for some sign that U.S. house prices have reached a bottom," he said. "Negative equity in the U.S. housing market is continuing to widen and we think it may peak in the second quarter of next year."

Major Japanese exporters rose. Honda Motor Co. gained 3.2 percent, Nintendo Co. jumped 5.8 percent and Sony Corp. closed up 3.8 percent.

Among losers, megabank Mizuho Financial Group Inc. fell 4.6 percent after reporting Thursday that its first-half profit sank 71 percent due to fallout from the global financial crisis.

In currencies, the dollar slipped to 97.06 yen from 97.90 late Thursday in New York, but was up from mid-95 levels Thursday in Asia.

Australian resource stocks rebounded after light, sweet crude for December delivery rose $2.08 to settle at $58.24 a barrel on the New York Mercantile Exchange Thursday. In Asian trading Friday, the contract dipped to $57.55 a barrel.

Australia's biggest oil and gas producer, Woodside Petroleum, rose 4.3 percent. Mining giants BHP Billiton and Rio Tinto also rallied, with BHP rising 7.4 percent and rival Rio Tinto up 7.7 percent.

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