LONDON — Optimism over the state of the U.S. economy supported markets on Friday ahead of a weekend meeting of the finance ministers of the leading 20 industrial and developing nations in Mexico, where Europe’s debt crisis will likely be a key topic of debate.
With Greece pressing ahead with demands to get its hands on a (euro) 130 billion ($173 billion) bailout, market concerns over an imminent default by the country have diminished, and that’s helped the euro spike to two and a month highs against the dollar.
On Friday, Greece is expected to launch a public offer for a massive bond swap designed to knock (euro) 107 billion ($142 billion) off its debt held by banks and other private investors.
“We have reached a point where concerns over Europe have been abated for the time being, allowing investors to focus properly on the rest of the global economy, and what people are seeing is pretty positive,” said Simon Furlong, a trader at Spreadex.
Particularly encouraging has been the recent economic newsflow out of the U.S., especially with regards to jobs. Later in the day, investors will focus on the closely-watched consumer confidence survey from the University of Michigan and figures on new house sales.
Economic recovery in the U.S. is hugely important for the global economy because it could help Europe’s ailing economy, further ease the debt concerns and shore up confidence in financial markets.
Last summer, when Europe’s debt crisis became particularly acute, worries over the U.S. economy, symbolized best by Standard & Poor’s decision to strip the world’s largest economy of its triple A rating, fueled the turmoil in the financial markets.
In 2012, signs of calm in Europe coupled with encouraging U.S. economic indicators have supported markets, with many of the world’s leading indexes back at levels they were trading at before last summer’s massive sell-off.
The positive momentum continued on Friday, when the FTSE 100 index of leading British shares was up 0.1 percent at 5,941 and Germany’s DAX rose 0.8 percent to 6,866. The CAC-40 in France was 0.5 percent higher at 3,465.
The euro traded up 0.2 percent at $1.3394, its highest level since Dec. 12.
Wall Street was poised for a similarly solid opening — Dow futures were up 0.2 percent at 13,002 while the broader Standard & Poor’s 500 futures rose 0.3 percent to 1,367.
Over the weekend, investors will be interested in what transpires at a meeting of the G-20 finance ministers and central bank governors in Mexico. While the gathering will focus on promoting global economic stability and growth, Europe’s debt crisis will remain a key topic.
In particular, European officials will press for countries like the U.S., China and the U.K. to allow the International Monetary Fund to contribute more money to eurozone rescue measures. Several countries are reluctant, however, to expose the IMF to more risk in Europe.
Earlier in Asia, Japan’s Nikkei 225 climbed 0.5 percent to close at 9,647.38 and South Korea’s Kospi added 0.6 percent to 2,019.89. Hong Kong’s Hang Seng rose 0.1 percent to close at 21,406.86.
Mainland Chinese shares were boosted by speculation local governments would relax restrictions on the property market and monetary authorities would tweak policy to stimulate growth.
The benchmark Shanghai Composite Index climbed 1.2 percent to 2,439.63, its highest close in more than 3 months. The smaller Shenzhen Composite Index gained 1.4 percent to 972.62. Shares in real estate, cement and coal minters led the advance.
One growing concern is the price of oil, which has been driven higher by tensions over Iran and the weakening dollar — kept Asian markets in check because of worries it could crimp the U.S. economic recovery.
Benchmark crude for April delivery was up 66 cents to $108.49 in electronic trading on the New York Mercantile Exchange.