HONG KONG – World stocks climbed Friday following confidence-boosting measures from European and British policymakers though investors became more cautious as they braced for a key U.S. jobs report.
After a week of wild gyrations stemming from Europe’s debt crisis, investors in Asia reacted positively to news that the Bank of England will turn on its stimulus taps and that the European Central Bank will offer new short-term loans to banks that are facing difficulties securing funding.
Asian stocks rose strongly before trimming gains late in the day.
Japan’s Nikkei index rose 1 percent to close at 8,605.62 after the country’s central bank said the economy is “picking up” and predicted an eventual return to a moderate recovery.
South Korea’s Kospi index jumped 2.9 percent to close at 1,759.77 and Hong Kong’s Hang Seng, with a few minutes of trading to go, was up 3 percent at 17,686.96 after surging 5.7 percent the day before.
Benchmarks in Taiwan, Singapore, Australia and New Zealand also advanced. Markets in mainland China were closed for a weeklong holiday.
The ECB and Bank of England plans announced Thursday didn’t translate into a second day of big gains for European shares, which edged higher in early trading. The FTSE 100 index of leading British shares rose 0.3 percent to 5,305.79 and France’s CAC-40 rose 0.4 percent to 3,088.19. Germany’s DAX advanced 0.5 percent to 5,674.39.
Wall Street was poised to open higher — Dow futures were up 0.1 percent at 11,053.00 and broader Standard Poor’s 500 futures rose 0.1 percent to 1,158.70.
“We’re seeing a lot of buying today basically because markets have bounced off their lows so a lot of people are covering their shorts ahead of the weekend” before stock prices increase further, said Andrew Sullivan, principal sales trader at Piper Jaffray Asia Securities Ltd. in Hong Kong.
Short sellers borrow a stock to sell and “cover their shorts” when they buy it back at a lower price, pocketing the difference when it is returned to the lender.
“There was positive news out of the U.K., out of Europe on the banking side certainly and that spurred a run on the U.S. banks being positive as well,” Sullivan said.
European and U.S. bank stocks gained after the ECB and Bank of England announcements on Thursday. The moves gave hope to global financial markets and were a sharp turnaround from the beginning of the week, when stocks tumbled on fears that European policymakers were acting slowly and indecisively to contain the debt crisis.
The ECB offered new unlimited emergency short-term loans to the continent’s battered banks, which have faced difficulties borrowing from each other because of worries about each other’s financial stability.
The ECB will also buy up to euro40 billion ($53 billion) in covered bonds, an important source of funding for banks. But it held interest rates steady, disappointing some economists who had hoped for a cut.
On the same day, the Bank of England said it would pump another 75 billion pounds ($116 billion) into the country’s stagnant economy, reviving an asset purchase program that injected 200 billion pounds from March 2009 to January 2010. The Bank’s decision came earlier and was bigger than many economists had predicted.
Looking ahead, investors were turning their attention to a key U.S. employment report for September that many hope will shed light on the state of the economic recovery. Investors were looking closely for any clues ahead of its release. Most expectations are pessimistic with job creation expecded to remain weak.
Piper Jaffray’s Sullivan noted that U.S. President Barack Obama delivered a speech on Thursday in which he “criticized Europe for dithering over Greece and its banks.”
“To some people that might indicate that jobs number is going to be worse than the market is expecting,” because it appears Obama is “going on the offensive and trying to deflect” criticism that his administration is responsible for those numbers, Sullivan said.
In currencies, the euro rose to $1.3447 from $1.3429 late Thursday. The dollar inched up to 76.64 yen from 76.61.
Benchmark crude oil for November delivery was down 6 cents to $82.53. The contract jumped $2.91, or 3.7 percent, to finish at $82.59 per barrel in New York on Thursday. Brent crude fell 26 cents, or 0.2 percent, to $105.47 in London.
