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Markets rise on improving US employment data, expectations Italy to pass austerity package
LONDON (AP) ' World stocks were buoyed Friday by improving U.S. economic indicators and the expected approval in Italy of an austerity plan intended to get the country's finances under control.
Investor sentiment rose after the U.S. government reported on Thursday that the number of people applying for unemployment benefits dropped sharply last week to 366,000, the fewest since May 2008. That's a sign that layoffs are easing, a first step toward bringing down the unemployment rate, which currently stands at 8.6 percent.
Traders were also encouraged by a report from the Federal Reserve of New York that its index measuring regional manufacturing jumped to the highest level since May. That was far more than economists were expecting. A similar report from the Philadelphia branch of the Fed also increased more than analysts anticipated.
"The market dropped for six straight days. Now it may find some excuse for a technical rebound. So the U.S. job figures may be the excuse," said said Linus Yip, a strategist at First Shanghai Securities in Hong Kong.
Later Friday, the Italian government will hold a critical confidence vote in the lower house of parliament on a euro30 billion ($39 billion) austerity package.
The plan aimed at persuading bond markets that the country can emerge from the widening European debt crisis is expected to pass. The country now sits on a euro1.9 trillion ($2.5 trillion) powder keg of debt that could spark a global economic recession if a default occurs.
"While the plan will very likely get the required support from MPs, it will be important to see whether amendments are proposed in terms of spending cuts and implementation schedule, in particular," Frederik Ducrozet, an economist at Credit Agricole CIB, said in a research note.
European shares rose in early trading, following gains in Asia. Britain's FTSE added 0.8 percent to 5,441.41 and Germany's DAX inched up 0.3 percent to 5,745.58.
France's CAC-40 rose 0.2 percent to 3,003.58 despite a report from the national statistics agency predicting a recession in the country over this quarter and the next.
Wall Street also appeared ready to head higher. Dow Jones industrial futures rose 0.6 percent to 11,889 while S&P 500 futures gained 0.6 percent to 1,218.90.
The euro was steady at $1.3027, as was the dollar against the Japanese yen, at 77.89 yen.
In Asia, Japan's Nikkei 225 index was 0.3 percent higher to close at 8,401.72. South Korea's Kospi rose 1.2 percent to 1,839.96 and Hong Kong's Hang Seng added 1.4 percent to 18,285.39. Benchmarks in Singapore, Taiwan and Indonesia also rose.
Mainland China shares ended a six-session losing streak, with the benchmark Shanghai Composite Index gaining 2 percent to close at 2,224.84.
Analysts stopped short of calling the gains a recovery, as trading was light ahead of the holidays.
Signs emerged that the Chinese central bank may have intervened in the currency market by offering dollars to support the Chinese yuan, which has been weakening in recent sessions. That raised speculation that authorities may plan more market-boosting measures.
The yuan strengthened to a record 6.3294 against the U.S. dollar, but later eased to 6.3446. Weakness in the yuan could raise tensions with countries such as the U.S. that complain it is already undervalued.
Benchmark oil for January delivery was up 26 cents to $94.13 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.08 to finish at $93.87 per barrel on Nymex on Thursday.
Pamela Sampson in Bangkok and Elaine Kurtenbach in Shanghai contributed to this report.