World Stocks Extend Gains

Global stock markets rose further yesterday after the Federal Reserve chief said the US economic recovery was on track and in the wake of positive Japanese economic growth data, dealers said.

Markets were meanwhile awaiting interest rate decisions from the European Central Bank and Bank of England. Ahead of the calls, the euro was up against the dollar, yen and the British pound.

London gained 0.18 percent in morning trade, although gains were capped by more heavy losses in the share price of embattled energy group BP.

Frankfurt gained 0.50 percent and Paris climbed 0.82 percent.

“European markets showed resilience this morning,” said City Index analyst Giles Watts. “Some further clues from Europe will be gleened from Trichet, after the ECB decision.”

ECB president Jean-Claude Trichet will have to answer questions at a press conference due after the rate decision about how he plans to steer the eurozone out of its debt crisis.

Most dealers want details on the bank’s decision to buy debt issued by countries such as Greece, Ireland and Portugal and on how long the controversial Securities Market Programme for such purchases might last.

Meanwhile in Asian trade, Tokyo ended 1.10 percent higher as official data showed the Japanese economy grew 5.0 percent in the March quarter, up from an initial estimate of 4.9 percent and beating forecasts for a fall back to 4.0 percent.

In the United States, Fed chairman Ben Bernanke told Congress Wednesday that the US economy was on track to grow 3.5 percent this year and suffer only a “modest” impact from the eurozone debt crisis.

“The economy … appears to be on track to continue to expand through this year and next,” he said, adding that the pace of recovery would likely quicken in 2011 on the back of rising consumer spending, trade and investment.

US consumers, long the drivers of the world’s largest economy, are spending around 3.5 percent more today than they were this time last year, Bernanke said.

But he warned that the property market continued to drag on the recovery as home prices are pushed down by vast numbers of vacant houses and home builders struggle to get credit.

The Fed’s latest Beige Book report on the state of the US economy said labour market conditions “improved slightly with permanent employment levels edging up in most districts”. US unemployment stands at 9.7 percent.

However, US stocks closed lower Wednesday after a late-session slide as optimism about the economic recovery gave way to a wave of selling amid growing concerns about the BP oil disaster in the Gulf of Mexico.

The Dow Jones Industrial Average dropped 0.41 percent and the tech-rich Nasdaq  index fell 0.54 percent.

BP shares collapsed Thursday as the US government tightened the screw on the British oil giant over the Gulf of Mexico oil spill that has cost the company billions of dollars.

BP slumped by almost 16 percent in London, mirroring the size of Wednesday’s fall in its US traded-shares as the US government gave the company 72 hours to update plans for containing the spill.

In initial deals on Thursday, the stock plunged 15.7 percent to 330 pence before recovering back to 370 pence, a drop of 5.50 percent.

In foreign exchange trade, the euro rose to 1.2082 dollars from 1.1975 dollars late in New York on Wednesday. The dollar edged up to 91.30 yen from  91.28 yen.