World stock markets rise after China reports slow, but still strong growth
The Associated Press
Published Monday, July 15, 2013 6:29AM EDT
BANGKOK, Thailand -- Global stock markets posted modest gains Monday, registering relief that a slowdown in China's economic growth wasn't as sharp as feared.
The world's second-largest economy grew 7.5 per cent from a year earlier in the second quarter, slowing from the previous quarter's 7.7 per cent, as weak trade and a clampdown on lending took their toll.
It was the second consecutive quarter of slower growth but still strong enough to suggest China can meet Beijing's 7.5 per cent target for this year.
A clampdown on risky lending at state banks had contributed to jitters that China's growth might fall below 7 per cent. That would hurt companies around the world that have become increasingly reliant on breakneck Chinese growth to boost earnings.
Nomura analysts Zhiwei Zhang and Wendy Chen said they were maintaining their 2013 growth forecast for China at 7.5 per cent but trimmed their 2014 forecast to 6.9 per cent from 7.5 per cent.
"The government has made it clear to the public that it is less concerned about the growth rate and more about the quality and sustainability of growth," they said in a report.
To avoid a sharper slowdown, China's central bank is likely to lower the proportion of deposits that banks must keep in reserve by a total of 1.5 percentage points by the middle of next year, the Nomura analysts said.
In early European trading, France's CAC 40 was up 0.8 per cent at 3,886.98 and Germany's DAX rose 0.6 per cent to 8,261.49. Britain's FTSE 100 climbed 0.7 per cent to 6,509.91. Wall Street was set for moderate gains with Dow and S&P 500 futures both up 0.2 per cent.
Among Asian markets, Hong Kong's Hang Seng added 0.1 per cent to 21,303.31 and Sydney's S&P/ASX 200 gained 0.1 per cent to 4,981.10. South Korea's Kospi rose 0.3 per cent 1,875.16.
Mainland China's Shanghai Composite Index advanced 1 per cent to 2,059.39. Japan's financial markets were closed for a public holiday.
Elsewhere, benchmarks in Singapore, India, Taiwan and New Zealand rose while Indonesia fell.
The gains in Asia and Europe also came after Wall Street eked out new highs.
After spending most of Friday flat or down, U.S. stocks rallied at the last minute and closed slightly higher, just enough to post record highs for the Dow Jones industrial average and the Standard & Poor's 500.
In energy trading, benchmark crude for August delivery was down 33 cents at $105.62 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained $1.04 to $105.95 in New York on Friday, driven higher by continuing tensions in Egypt and a sharp drop in U.S. crude stockpiles.
The euro fell to $1.3030 from $1.3066 late Friday. The dollar rose to 99.85 yen from 99.14 yen.
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