2009-Dec-21 - Shares Higher on First Day of a Short Week

European stock markets rose Monday during what is expected to be a light week ahead of the Christmas holiday.

Trading is likely to be light during the Christmas holiday-shortened week, but that can add to volatility. Markets will be closed Friday.

Investors traditionally avoid placing big bets during the last two weeks of the year. Traders are likely to be closing out books and locking in gains from a nine-month rally. Major indexes are all sharply higher in 2009.

In London, the FTSE 100 was up 66.12 points, or 1.3 percent, while the DAX in Frankfurt rose 48.96 points, or 0.8 percent. The CAC-40 in Paris was 43.15 points, or 1.1 percent higher.

“With volumes steadily dropping ahead of the holiday, most are happy to sit the next couple of weeks out and look at the markets with a fresh pair of eyes in 2010,” a sales trader at IG Index, Philip Gillett, said. “For the short-term at least, it seems unlikely that stock markets will make much progress.”

Wall Street was also poised to open higher at the open later. The government on Tuesday releases its final report on third-quarter gross domestic product, which measures the total economic output of the country. Economists polled by Thomson Reuters predict third-quarter growth was unchanged at an annual rate of 2.8 percent.

Data on existing and new home sales are also due out later in the week. Both reports are expected to show sales rose about 2 percent in November. A recovery in the housing market is considered vital to foster a recovery because a collapse in sales and prices coupled with mounting mortgage defaults helped throw the nation’s economy into recession.

Orders to American factories for big-ticket manufactured goods likely rebounded in November. Orders for durable goods that are expected to last more than three years likely rose 0.5 percent in November, after a 0.6 percent drop a month earlier. The report is due out Thursday.

Earlier, Asia experienced a mixed session, with Japan’s Nikkei index boosted by figures showing that the country’s exports fell by their smallest amount in 14 months during November inferred heaters. The news raised hopes that a turnaround in Japan’s export sector, the engine of the country’s economy, is sustainable.

However, sentiment in the region was dampened by sluggish sessions in Hong Kong and Shanghai as investors were spooked by signs China’s government may step up restrictions on the booming real estate sector and the country’s banks may have to raise billions in new capital.

The Nikkei advanced 41.42 points, or 0.4 percent, to 10,183.47. Markets in Taiwan and Thailand also rose.

Hong Kong’s benchmark dropped 227.78 points, or 1.1 percent, to 20,948.10. China’s Shanghai index was down most of the day before closing 0.3 percent higher at 3,122.97.

In the currency markets, the euro recovered modestly from three and a half month dollar lows of $1.4281, trading 0.3 percent higher on the day at $1.4344.

The dollar has bounced back from 15-month euro lows in the last three weeks amid mounting expectations that the Federal Reserve will start withdrawing its extraordinary liquidity measures and raising interest rates sooner than expected. Meanwhile, the euro has been dogged by concerns over the economic situation in a number of European countries.

Oil prices hovered above $73 a barrel Monday ahead of an OPEC meeting on Tuesday where investors expect the cartel to keep production levels unchanged.

Leaders of the Organization of the Petroleum Exporting Countries have signaled in recent weeks the group does not plan to change output levels at its meeting in Luanda, Angola.

“The market would be surprised if there was any change to output,” said Clarence Chu, a trader with Hudson Capital Energy. “At near $75, the price is high enough to fund governments and investment, but not so high it damages the global economic recovery.”

Shares Higher on First Day of a Short Week