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US and European stocks post rise.

03 February 2010 11:35 (UTC +04:00)

BakÄ±-APA-Economics. European stocks recovered from early weakness Wednesday, after upbeat sessions on Wall Street and in Asia overnight, although traders were cautious ahead of news on European support for Greece, a Norges Bank interest rate decision and a rash of economic releases, the Wall Street Journal reported.

The U.S. data have continued to show signs of accelerating industrial growth. However, the nonfarm payrolls figures at the end of this week are a risk, said strategists at Goldman Sachs. "Financial reform will likely linger as a market concern, little progress has been made in sorting out Greece’s imbalances, market comfort with China tightening may still take some time, and we continue to expect [U.S.] gross domestic product growth to moderate sequentially for much of 2010," added Goldman’s strategists.

By 0910 GMT, the pan-European Dow Jones Stoxx 600 index was up 0.3% at 251.54. London’s FTSE 100 was 0.2% higher at 5295.05, Frankfurt’s DAX was up 0.4% at 5729.91 and Paris’s CAC-40 was up 0.4% at 3825.38.

Investors were focusing on Wednesday’s verdict from the European Commission on Greece’s plan to narrow its budget deficit as well as the European Central Bank’s rate-setting meeting Thursday. This plan "should relieve some of the near-term pressure [on Greece], although the concern about other peripheral nations (notably Portugal) is likely to persist," said Ian Williams, strategist at Altium Securities.

At the same time, market participants had their eyes on an interest rate decision from the Norges Bank at 1300 GMT, euro-zone retail sales data at 1000 GMT, the U.K. services PMI data at 0930 GMT and the U.S. non-manufacturing ISM data at 1500 GMT.

The highlight of the day, however, will be the U.S. Automatic Data Processing employment report at 1315 GMT, which will be of particular interest ahead of Friday’s key U.S. employment figures. Economists surveyed by Dow Jones Newswires expect the ADP report to show 30,000 jobs shed in January, compared with 84,000 lost in December.

"Further reduced employment levels could be seen, as the consensus expects, but bear in mind that we may be around a turning point for the labour market. Still, we should not expect a rapid decline," said Raphaelle Knight, analyst at Newedge Group.

On the stocks front, healthcare stocks declined after Swiss drug maker Roche Holding AG reported a decline in full-year net profit on expenses related to the takeover of California-based biotech firm Genentech last year, but said brisk sales of flu drug Tamiflu and cancer medicines drove revenue higher. Shares in Roche fell 3.6%, while France’s Sanofi-Aventis was trading 0.2% lower. In London, GlaxoSmithKline shares were off 0.8%, while the pan-European Dow Jones Stoxx 600 healthcare index was 0.8% lower at 368.78.

On Wall Street Tuesday, stocks climbed as an unexpected rise in pending-home sales and a surprise quarterly profit from builder D.R. Horton lifted other stocks connected with the housing market, while a forecast from United Parcel Service also boosted sentiment.

Overall, the Dow Jones Industrial Average rose 1.1% to 10,296.85. The gain, combined with a 118.20 rise on Monday, represents the first time the measure has had two straight days of triple-digit gains since early October. It also marks the measure’s biggest two-day gain since early November. Among other measures, the Standard & Poor’s 500 rose 1.3% to 1103.32, while the technology-heavy Nasdaq Composite climbed 0.8% to 2190.06.

The unexpected rise in pending-home sales suggested the housing market is steadying after sharp swings caused by a government tax credit, while builder D.R. Horton swung to a surprise first-quarter profit--its first since the sector crashed--aided by improving business and a tax benefit. Horton’s shares jumped 11%.

Meanwhile, UPS shares climbed 0.4%, after the company’s outlook provided fresh optimism about the global economic recovery as executives forecast package volume, pricing and profit to strengthen this year. The comments came as the world’s largest package shipper by volume reported a near-tripling in fourth-quarter profit.

The upbeat tone on Wall Street helped Asian stocks post gains early Wednesday. Regional bourses were modestly higher, but investors remained cautious ahead of key earnings reports and the U.S. jobs data due later in the week.

Japan’s Nikkei 225 was up 0.3%, South Korea’s Kospi Composite gained 1.2% and the Shanghai Composite was up 2.3%. Hong Kong’s Hang Seng index advanced 2.2%, while Taiwan shares were 1.6% higher.