Global stock markets mostly rose Tuesday after a run of solid economic news, notably out of China, helped keep concerns over the European debt crisis at bay.
The euro also bounced back, trading 0.7 percent higher at $1.3041. Last week, it hit a 15-month dollar low of $1.2857 on worries that the European debt crisis will escalate this year and envelop Italy, the third-largest economy in the 17-nation Eurozone.
Europe's debt woes will likely remain the main catalyst to markets over the coming days and weeks, but in the absence of any fresh bad news, trading in 2012 has got off to a fairly buoyant start. Surveys showing that growth in China and India may be picking up momentum has helped shore up the underlying mood.
However, many of the world's leading indexes are starting 2012 after a year to forget. In Europe, Germany's DAX was up 1.2 percent at 6,146 but the CAC-40 in France was 0.5 percent lower at 3,206. Britain's FTSE 100 index of leading British shares, which was closed Monday, was trading 1 percent higher at 5,627.
Wall Street was poised for a fairly solid opening — Dow futures were up 1.1 percent at 12,286 while the broader Standard & Poor's 500 futures rose 0.6 percent to 1,259. It's a very busy week on the economic data front, culminating in Friday's closely watched U.S. non-farm payroll figures for December. That often sets the market tone for a week or two and investors will be keen to see if the recent improvement in the U.S. economic news is evident in the figures.
The consensus in the markets is that the U.S. economy generated another 150,000 or so jobs during the month — a solid, if unspectacular, jobs creation in the world's largest economy. Before then, investors have other frontline figures to digest, kicking off Tuesday with the December manufacturing survey from the Institute for Supply Management, which is expected to rise to 53.4 in December from the previous month's 52.7 — anything above 50 indicates expansion.
Investors will also be interested in the minutes from the last rate-setting meeting of the U.S. Federal Reserve — looking to see whether the central bank's outlook is less gloomy than before. "The market is hoping for further improvement in U.S. December payrolls data and this could lend support to risk appetite," said Jane Foley, an analyst at Rabobank International.
Although that could give the euro some further respite this week, Foley said the currency "remains in a very vulnerable position." Following a year when policymakers across the Eurozone have consistently failed to match expectations of resolving the debt crisis, investors will be monitoring how efforts are going to enforce greater budgetary discipline on the 17 countries that use the euro.
This week, both France and Germany will be tapping bond markets for fairly large amounts of money in what will be fairly significant tests of market confidence. Next Monday, French President Nicolas Sarkozy and German Chancellor Angela Merkel will be holding their first meeting of the new year.
Progress on Greece's talks with private creditors to take a bigger loss on their Greek bonds will also be closely monitored. As part of the country's second financial bailout, private creditors have been asked to forgive 50 percent of their holdings, but many in the markets think that's not enough. There's speculation that the so-called Greek haircut may have to rise, possibly up to 75 percent.
"With the continuing economic woes of the country and the possibility that at some stage the rest of the EU may decide not to throw good money after bad there must be a growing possibility that the actual write-down could eventually be close to 100 percent," said Gary Jenkins, director of Swordfish Research.
Earlier, Asian stocks rose, with Hong Kong's Hang Seng Index, on its first trading session of 2012, jumped 2.4 percent to close at 18,877.41. South Korea's Kospi index rose 2.7 percent to 1,875.41 and Australia's S&P ASX 200 gained 1.1 percent at 4,101.20. Benchmarks in Japan and mainland China remained closed for the extended New Year's holiday.
Oil prices tracked equities higher — benchmark crude for February delivery rose $2.07 to $100.90 a barrel in electronic trading on the New York Mercantile Exchange.