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European shares mixed; Wall Street set to gain

LONDON – European markets lacked direction Thursday as investors waited for the open on Wall Street, where stocks were expected to rise, as well as readings on U.S. economic output and weekly unemployment claims.

By noon in mainland Europe, Britain’s FTSE 100 was up 0.2 percent to 3,906.52, Germany’s DAX rose 0.6 percent to 4,248.69, and France’s CAC 40 slipped 0.1 percent to 2,889.47.

Asian markets gained, after Wednesday’s better-than-forecast U.S. economic data on new homes sales and durable goods orders buoyed hopes that government stimulus measures are starting to heal the global economy.

Reports are due from the U.S. later Thursday on gross domestic product for the final three months of 2008 and on the number of workers seeking unemployment benefits last week.

Ahead of the reports, Dow Jones industrial average futures climbed 1.1 percent to 7,759, Standard & Poor’s 500 index futures rose 1.2 percent, and Nasdaq 100 index futures added 1.4 percent.

In Europe, worse-than-expected data showed retail sales in Britain fell 1.9 percent from January to February, pushing the annual gain to its lowest in nearly 14 years. Sales fell in all categories between January and February, the Office for National Statistics said, as fears about unemployment amid the economic crisis made shoppers cautious.

Meanwhile, German consumer confidence fell for the first time since October, but remained relatively robust, as worries about unemployment offset optimism about government stimulus plans, according to a leading survey by GfK research group.

In Stockholm, shares in Swedish fashion chain Hennes & Mauritz AB dropped 5.3 percent after it said first-quarter net profit fell 12 percent due to shifts in foreign exchange rates and lower consumer spending.

But with little overall momentum, European stock markets were awaiting direction from the U.S. later in the day.

“We’re treading water mainly in Europe,” said James Hughes, market analyst at CMC Markets. “Early this morning we had the really poor retail figures which dragged the market down to start with, but we seem to have recovered and that’s because the U.S. markets are looking to open higher.

“We have got some quite important numbers out of the U.S. later today. They have the potential to move things. If we get more economic data like we had yesterday … then that’s enough to boost sentiment again,” he added.

Every major market across Asia advanced on the back of Wednesday’s figures showing orders at U.S. factories for cars, household appliances and other durable goods climbed 3.4 percent last month, and new home sales rose 4.7 percent in February. The figures — better than the market’s expectations — lifted optimism that demand in the world’s largest economy might bottom out in the coming months.

That’s critical for export-driven Asian countries like Japan, South Korea and Taiwan whose economies are getting hammered as American companies and consumers cut back their spending amid the country’s worst recession in decades.

“These are some of the first signs that we might be seeing a recovery. The hope is that the U.S. economy might be bottoming out,” said Francis Lun, general manager of Fulbright Securities Ltd. in Hong Kong. “People are just encouraged the economy hasn’t completely dived yet.”

Hong Kong’s market led Asia higher, with the Hang Seng vaulting 486.87 points, or 3.6 percent, to 14,108.98. Japan’s Nikkei 225 stock average rose 156.34 points, or 1.8 percent, to 8,636.33, and South Korea’s Kospi climbed 1.2 percent to 1,243.80.

Elsewhere, Shanghai’s index jumped 3.1 percent, Australia’s benchmark added 1 percent and Singapore’s key stock measure advanced 4 percent. India’s Sensex rose 3.5 percent to 10,003.10.

The U.S. economic reports lifted exporters, with Sony Corp. jumping 6.8 percent and Nikon Corp. gaining 4 percent in Tokyo.

Upbeats assessments from U.S. banks, combined with government financial bailouts and better-than-expected data, have elevated investors hopes of a turnaround and led markets worldwide dramatically higher this month.

Benchmarks in Japan and Hong Kong, down sharply just weeks ago, are now almost flat for the year. South Korea’s Kospi has added more than 10 percent for the year.

“The stock market in the past two weeks has also gone up a lot,” Hong Kong billionaire Li Ka-shing, one of Asia’s richest men, told reporters in Hong Kong as his companies, Cheung Kong and Hutchison Whampoa, announced earnings. “If the U.S. economy can get a foothold, the whole world will respond positively.”

Oil prices rose in European trade, with crude for May delivery up 86 cents at $53.63 a barrel.

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