Global stocks rise, Shanghai steadies after dramatic dive

LONDON - Global stock markets rose yesterday and Shanghai rebounded from a dramatic dive the day before, after China's economic slowdown in the fourth quarter wasn't as sharp as feared and amid speculation that the European Central Bank will take steps to stimulate the economy.

KEEPING SCORE: Europe stock markets rose with Britain's FTSE 100 up 0.7 percent at 6,630.19. France's CAC 40 gained 1.3 percent to go to 4,450.08 while Germany's DAX gained 0.3 percent to 10,270.49 at midday. Wall Street was set for gains after a long weekend. Dow futures rose 0.4 percent to 17,506 and S&P 500 futures gained 0.5 percent to 2,022.50.

CHINA GDP: China's economy expanded 7.4 percent last year, its weakest performance in 24 years, but fourth quarter growth of 7.3 percent was slightly higher than expected. China's slowdown is partly a function of Beijing's efforts to transform the economy, weaning it off overreliance on heavy industry and trade in favor of domestic consumption. But the transition has been buffeted by a range of problems, including a slumping property market and uneven exports. Mizuho Bank Ltd. said in a report that a pickup in service industries was an upbeat sign that offset slowing industries such as construction.

ANALYST'S TAKE: "With growth moderating in China, the next phase of the country's economic prosperity is being mapped out through fiscal regulation and sustained growth targets," said IG strategist Evan Lucas in a commentary. "Those ideas mean the central government is also looking to moderate rampant speculation, encourage sustained growth for domestic demand and ensure private enterprise becomes more self-sufficient."

EUROPEAN STIMULUS: Investors are speculating that the European Central Bank will authorize asset purchases to stimulate the economy later this week. Europe's economy got other positive news yesterday as a survey showed market optimism rose more in Germany than expected in January and a survey of bank lending showed more demand from companies for loans. "With the European Central Bank (ECB) set to provide significant amounts of new funding at very low rates, financing costs should fall further," Invesco said in a statement. "All of these factors suggest to us that the European economy is in much better shape than generally appreciated and can continue to gradually improve."

GLOBAL GROWTH: The International Monetary Fund lowered its forecasts for global growth over the next two years, warning that persistent weakness in most major economies will outweigh the boost from lower oil prices. It cut the projections it issued in October by 0.3 percentage point each, predicting global growth at 3.5 percent this year and 3.7 percent in 2016. Markets were unruffled as the lower forecasts were expected.

CHINA CURBS: Investors appeared to have regained some confidence in Chinese markets a day after the Shanghai index plunged in response to curbs on margin trading. The China Securities Regulatory Commission's decision was a sign authorities are worried about the market's big gains in recent months that have been fueled by borrowed money. IG said the clampdown could be helpful for China's economy in the longer term as it might help redirect lending to more productive uses.

ASIA'S DAY: China's Shanghai Composite closed up 1.8 percent at 3,173.05 after plunging 7.7 percent on Monday in reaction to a regulatory clampdown on brokerages financing the stock purchases of investors. Japan's Nikkei 225 rose 2.1 percent to 17,366.30 and South Korea's Kospi gained 0.8 percent to 1,918.31. Hong Kong's Hang Seng was up 0.9 percent to 23,951.16. Australia's S&P/ASX 200 was nearly unchanged at 5,307.70.

ENERGY: Benchmark US crude was down $0.94 to $47.75 a barrel in electronic trading on New York Mercantile Exchange compared with the close on Jan.16. Brent crude, a benchmark for international oils, rose 48 cents to $49.32 a barrel just before midday in London.

CURRENCIES: The dollar rose to 118.67 yen from 117.81 yen. The euro fell to $1.1579 from $1.1591. The pound rose against the dollar to $1.5153 from $1.5113