World Stocks Rise on Consumer Spending

World stocks rose Friday, as strong earnings from consumer goods companies and a rise in European economic confidence suggested that household spending may slowly be picking up amid the economic downturn.

The strongest reports came overnight from U.S. computer maker Dell and French cosmetics company L’Oreal SA as well as from retailing giant Carrefour early Friday.

Germany’s DAX rose 87.77 points, or 1.6 percent, to 5,558.10 while Britain’s FTSE 100 gained 54.90 points, or 1.1 percent, to 4,924.25. France’s CAC-40 rose 56.02, or 1.5 percent, to 3,704.55.

Asian closed mostly higher, helped by the better earnings news and despite some jitters in Chinese markets, where concerns remain that Beijing may cut back on its stimulus measures. Further gains were also expected on Wall Street later.

Dell Inc.‘s second-quarter earnings report showed a 23 percent drop in net profit but still beat market expectations. Shares in the company, which has struggled throughout the recession as companies cut back on technology hardware, rose as much as 6 percent on the news.

Other upbeat reports came from France, where shares in cosmetics company L’Oreal jumped 6.7 percent as markets looked past its lower profits to focus on rising sales. Carrefour SA, the world’s second-largest retailer, saw its shares rise 4.5 percent after saying it would meet its 2009 profit targets despite a loss in the first half.

Meanwhile, official data showed business and consumer confidence rose in the 16-nation euro zone. Eurostat, the European Union’s statistics agency, said its measure of business sentiment for the euro zone rose to -2.21 points in August from -2.70 points the previous month.

In a separate survey, Eurostat said its reading of consumer optimism improved marginally as well.

Although the figures remain weak in historical terms, they suggest the region is continuing to gradually emerge from its worst downturn in decades.

“With other euro-zone business surveys also rising sharply, the chances of the region expanding in the third quarter are growing,” said Ben May, European economist at Capital Economics in London.

He warned, however, that with trade unlikely to give a big boost to growth, unemployment still on the rise and households’ income growth slowing “a robust recovery seems too much to hope for.”

Market sentiment in the U.S. and Asia was upbeat — although stock movements were limited by weak summer trading volumes — after official data showed the U.S. economy shrank at a 1 percent annualized rate in the second quarter. While unchanged from a preliminary reading on gross domestic product, the updated figure was much better than the expected 1.5 percent decline and added to evidence the world’s largest economy was turning around.

However, gains in Asia were capped by fears about China’s measures to prevent the economy from overheating after loose banking policies and frenetic stimulus spending unleashed enormous liquidity that has helped lift regional markets since March.

“Investors are still worried about the policies in China,” said Marcus Au, a market analyst at Tanrich Financial in Hong Kong. “After helping the markets for months, the China story is now starting to weigh on sentiment.”

Japan’s Nikkei 225 stock average rose 60.17 points, or 0.6 percent, to 10,534.14 despite news that Japan’s unemployment rate rose to an all-time high in July and prices fell at a record pace — both threatening to dull the economy’s recovery.

In China, the Shanghai benchmark dove 2.9 percent to 2,860.69, and Hong Kong’s Hang Seng was off 0.7 percent at 20,098.62.

Korea’s Kospi was up 0.5 percent, India’s Senses fell 0.4 percent, Australia’s main index rose 0.9 percent and Taiwan’s market gained 1.8 percent.

Overnight on Wall Street, the Dow rose 37.11, or 0.4 percent, to close at 9,580.63. The benchmark has advanced for eight straight days, rising 445 points, or 4.9 percent.

The Standard & Poor’s 500 index rose 2.86, or 0.3 percent, to 1,030.98.

U.S. futures pointed to a slightly higher open Friday on Wall Street. Dow futures were up 20 points at 9,587 and S&P futures gained 4.10 points to 1,033.40.

Benchmark crude for October delivery added 73 cents to $73.22, extending a $1.06 gain overnight.

The dollar rose to 93.88 yen from 93.49 yen while the euro rose to $1.4352 from $1.4334.

___

Associated Press Writer Jeremiah Marquez in Hong Kong contributed to this report.

8/28/2009 6:27 AM CARLO PIOVANO, AP Business Writer LONDON