11 Nov 2008

Europe shares end higher on China move

8:38 am on 11 November 2008

European shares rose on Monday after the announcement of a huge economic stimulus plan for China. However, there are doubts about whether the plan is enough to avert a sharp global slowdown.

The FTSEurofirst 300 index of top European shares closed up 0.9% at 922.48 points. It was the eighth day of gains in the last 10 for the index.

Metal prices surged after China approved a huge rise in new government spending and the G20 group of nations pledged to take all necessary steps to put financial markets back on their feet.

China announced a 4 trillion yuan ($US586 billion) spending package on Sunday as well as a shift to "moderately easy" monetary policy.

Commodities were the biggest movers on the index. Oil rose in price by more than 5%. Miners were also higher after copper rose 8.3%.

Across Europe: Germany's DAX was 1.8% higher and France's CAC 40 was up 1%.

In Britain, the FTSE 100 rose 0.9% to end 38.96 points higher at 4,403.92 points.

Banks were the biggest losers: Banco Santander of Spain fell 5% after announcing a rights issue of $US9.2 billion to shore up its capital.

HSBC lost 1.5% after announcing its profits in the nine months to the end of September were lower than the same period of 2007. Profit was down by 28% in the first half.

Food retailers were in the doldrums: Tesco was 5.9% lower after a dip in sales in South Korea, its biggest market outside Britain.

Other markets

Asian markets rose sharply on Monday. The Shanghai Composite Index was up 7.3% higher at 1,874.80.

In Tokyo, the Nikkei 225 stock average closed up 5.8% to 9,081.43, helped by the weaker yen.

The Hang Seng Index in Hong Kong was up 3.39% at 14,726.59.

The Australian share market firmed more than 1.3%. The S&P/ASX200 index was up 56.5 points, or 1.39%, to 4107.8, while the All Ordinaries index rose 53.4 points, or 1.33%, to 4060.

On the Sydney Futures Exchange, the December share price index futures contract added 10 points to 4134 on a volume of 38,946 contracts.

The New Zealand share market closed up, with the NZX 50 46 points, or 1.6%, higher at 2837 on turnover of $41 million.

Auckland Airport closed up 40c to $1.79, Telecom rose 15c to $2.14, Contact Energy was unchanged at $7.41, Fletcher Building was up 8c to $5.76, PGG Wrightsons fell 16c to $1.59 and Freightways fell 3c to $3.01.

The New Zealand dollar was trading at US59.65 cents, 87.09 Australian cents, 37.67 pence, 58.92 yen and 0.4632 euro. The Trade Weighted Index was 59.99.