London - World stock markets soared on Thursday, with Hong Kong's benchmark vaulting more than 7%, as stronger-than-expected US economic figures boosted confidence that the world's largest economy is on the mend. A mood of optimism also pervaded the markets as leaders of the world's 20 biggest developed and developing countries met to find a way out of the economic crisis.
Huge gains in Asia and a strong open in Europe followed an overnight surge on Wall Street and extended last month's rebound amid tentative signs of stabilisation in the hard-hit global economy and banking industry.
In European morning trading, Britain's FTSE 100 rose 3% to 4,072.46, Germany's DAX surged 4.6% to 4,310.82 and France's CAC 40 jumped 4% to 2,951.75.
"There's some renewed optimism around the G20 meeting today and the possibility there might be something structured coming out of it," said Richard Hunter, analyst at Hargreaves Lansdown Stockbrokers.
President Barack Obama and the summit host, British Prime Minister Gordon Brown, have expressed confidence that world leaders will come up with a strong agreement to address financial regulation, growth, and troubled banks. But French President Nicolas Sarkozy and German Chancellor Angela Merkel have refused calls for more government spending, and said the meeting must take concrete steps on tougher financial regulation.
Investors in Europe were also awaiting a key interest rate decision from the European Central Bank at 10:45 GMT. The bank is expected to cut its benchmark interest rate by a quarter or a half percentage point to a record low as more grim economic news emerges from the eurozone, the 16 countries that share the euro.
With many economists predicting the bank won't cut further after Thursday, interest will focus on what President Jean-Claude Trichet says about other measures it could take if the economy needs more of a push.
Signs of green shoots
In Europe and Asia, financial and auto stocks charged higher after US home sales, manufacturing and auto data suggested the US recession may be moving closer to a bottom.
Car makers BMW, DaimlerChrysler and Renault jumped 9.6%, 9.1% and 8%, and tire maker Michelin added 10.9%. In Asia, Toyota and Nissan strengthened 5.5% and 14% on US auto figures that were less dismal than feared. Investors were encouraged after US car sales jumped by nearly 25% last month from February, beating the typical rise and underpinning hopes of a turnaround in the American auto market.
A rebound in pending US home sales in February from a record low, as well as improving manufacturing activity, added to a growing belief the most severe global downturn in decades may be moving close to a bottom.
Still, the upbeat evidence distracted investors from more sobering news that the US private sector continued to shed hundreds of thousands of jobs last month - a worrisome sign as investors brace for Friday's report on nationwide job cuts.
With the economic crisis still far from over, analysts warned of more painful market volatility as the recession unfolds.
"We're starting to see some initial signs of green shoots. The question is whether or not this is a sound foundation for stability in the economy," said Song Seng Wun, head of research at CIMB-GK in Singapore. "It's still hard to tell."
Wall Street was expected to open higher. Dow Jones Industrial Average futures were up 126 points at 7,844 and Standard & Poor's 500 futures gained 14.4 to 823.60.
In Asia, Japan's Nikkei 225 stock average jumped 367.87 points, to 8,719.78, while Hong Kong's Hang Seng led the region's gains, soaring 1,002.43 points, to 14,521.97. South Korea's Kospi added 3.5% to 1,276.97.
Elsewhere, benchmarks in Australia and Taiwan gained about 3%. Singapore jumped 5.3% and India's Sensex climbed 4.9%.
Sentiment got a lift from overnight gains on Wall Street. The Dow rose 152.68, to 7,761.60, and broader market indicators also rose. The Standard & Poor's 500 index rose 13.21, to 811.08.
Oil rose above $50 a barrel in Europe as investors weighed glimmers of hope in the US economy against concerns that global demand remains weak. Benchmark crude for May delivery rose $2.47 to $50.86 a barrel. The contract fell $1.27 on Wednesday to settle at $48.39.
- AP