Stocks today: Japan index up a record 14%, Europe markets rise
LONDON -- Markets across Europe and Asia rose for a second day Tuesday and Wall Street stocks were primed to surge, as investors continued to express confidence in steps taken by governments around the globe to deal with the worldwide financial crisis.
On the London Stock Exchange, Europe's biggest, the FTSE 100 index of biggest companies was up 5.60% in afternoon trading. That followed a rise of 8.26% Monday. In Paris, the CAC-40 was up 5.47% after rising 11.18% Monday. And in Frankfurt, the Dax was up 5.13%, after closing up 11.4% a day earlier.
U.S. futures were also sharply higher.
The gains came after the U.S. Dow Jones industrial average jumped 11.08% Monday and amid news that the U.S. Treasury would announce it is pumping $250 billion into American banks. The U.S. action is similar to how Britain's taxpayers took shares in three of their biggest banks on Monday in a bid to prop them up and encourage lending.
Tokyo's benchmark Nikkei 225 index shot up a staggering 1,171 points, or 14.2%, to 9,447.57 — reclaiming some of the ground lost in a 24% free-fall last week. The performance shattered the old record, a 13.2% rise on Oct. 2, 1990.
Elsewhere, stocks rallied a second straight day Tuesday, rising 3.4% in Hong Kong, 6.1% in South Korea, 4.1% in Singapore and 5% in Thailand.
Japanese markets had been closed Monday for a national holiday.
Global markets had been pounded last week by fears that governments weren't doing enough to control a financial contagion that began with the collapse of the U.S. housing market last year.
But investors have been reassured since the weekend by a series of aggressive efforts at damage control: On Monday, U.S. policymakers announced plans to invest $250 billion in U.S. banks, strengthening their capital cushion against losses from bad loans. Earlier, European countries had pledged $2 trillion to protect their own banks. Central banks around the world also have been cutting interest rates to thaw out a financial system frozen because bankers are too frightened to make loans to each other.
The salvage work continued Tuesday: Australia announced a $7.3 billion economic stimulus plan, pushing Australian stocks up 3.7%.
"A lot of the fear-driven panic that drove markets to losses in the past week is being placated," said Glenn Maguire, chief Asia economist at Societe Generale bank in Hong Kong. "An enormous amount of money has been thrown directly at the market or offered as a guarantee to deposits. We are getting close to the point where we can say policymakers have put a floor under the losses."
But Maguire warned that "it's a little bit premature to say the worst is over." The financial crisis has likely done damage to real economies around the globe, he said. After seeing their stock prices battered and their lines of credit cut off by panicked lenders, many corporations are likely to cut spending and jobs, denting economic growth and raising unemployment rates around the world.
Contributing: wire reports