World Markets up on Pension Fund Buying Spree

A passers-by looks at an electronic stock board in downtown Tokyo, Japan, Friday, Oct. 31, 2008.

(Koji Sasahara/AP Photo)

World markets rose Friday amid stock buying from pension funds balancing their portfolios at the month's end and a general sense that share prices may have hit a bottom. Asian shares had earlier closed mostly lower.

The Dow Jones index of leading U.S. shares was up 88.72 points, or 1.0 percent, at 9,269.41 despite further dreadful U.S. economic data.

Britain's FTSE 100 index was 85.69 points, or 2.0 percent, higher at 4,377.34 despite a 19 percent plunge in the share price of telecommunications company BT PLC after it issued a profits warning.

Meanwhile, the CAC-40 in France was 79.25 points, or 2.3 percent, higher at 3,487.07. Germany's DAX saw the biggest gains, having underperformed the other indexes all week. It was 118.67 points, or 2.4 percent, higher at 4,987.97.

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Concerns about the global economy were stoked further Friday after the Commerce Department said U.S. personal spending fell by 0.3 percent last month, the biggest decline since June 2004. Combined with flat readings in both July and August, it led to the worst quarterly performance in 28 years.

And the Chicago Purchasing Managers Index, a measure of manufacturing activity, fell to a reading of 37.8 — much worse than the 48.0 figure that analysts anticipated. But the University of Michigan's consumer sentiment data came in at 57.6, slightly better than the 57.5 expected.

However, Wall Street's reaction to the data was minimal given the downturn had already been priced when it was revealed Thursday that the U.S. economy contracted by 0.3 percent in the third quarter of the year.

Trading is complicated Friday by the fact that it is the end of the month and many investors, particularly pension funds, are looking to rebalance their holdings among stock sectors and other investments such as bonds to fit their investment approach, after what has been one of the most volatile trading periods in modern times.

Despite the month-end technicalities, there is a general feeling that the wild swings in stock markets seen in recent weeks may have to an end, for now at least.