Tuesday 30th April 2013
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Wall Street and European stocks gained as the latest economic data underpinned expectations that monetary policy makers on both sides of the Atlantic will signal a fresh commitment to their plans to revive growth.
US Federal Reserve policy makers begin a two-day meeting on Tuesday amid a slew of recent economic data indicating weakness in the pace of the recovery.
While consumer spending rose 0.2 percent in March after a 0.7 percent increase in February, according to Commerce Department data released today, those gains were driven by cool weather which boosted utility bills.
In afternoon trading in New York, the Dow Jones Industrial Average added 0.81 percent, the Standard & Poor's 500 Index rose 0.84 percent, while the Nasdaq Composite Index gained 1.04 percent.
"There's just a positive tone to the market in part because recent lacklustre economic trends have reinforced investors belief that the Federal Reserve will continue to press on the gas pedal," Chad Morganlander, a Florham Park, New Jersey-based fund manager at Stifel Nicolaus & Co, told Bloomberg News.
Expectations that the Fed will maintain, possibly extend, its program of bond purchases weighed on the greenback. The US dollar weakened 0.5 percent to US$1.3093 per euro and fell 0.1 percent to 97.91 yen.
Even so, housing remains a bright spot in the American economy. The National Association of Realtors' index of pending home sales rose a better-than-anticipated 1.5 percent in March after a revised 1 percent drop the prior month that was larger than initially reported.
Shares of Apple gained, last up 3.8 percent at US$432.93, along with other tech stocks including Microsoft, up 2.8 percent, and Hewlett-Packard, also up 2.8 percent.
In Europe, the Stoxx 600 Index rose 0.5 percent from the previous close. The UK's FTSE 100 gained 0.5 percent, Germany's DAX increased 0.8 percent and France's CAC 40 added 1.5 percent.
Italy's FTSE MIB climbed 2.2 percent after Enrico Letta was sworn in as prime minister yesterday, ending a stalemate after February's vote failed to produce a winner.
"After the election there was a lot of uncertainty about whether Italy could form a government, so now there is not only a great deal of relief over that, but also expectations for additional monetary policies from the ECB," Alec Young, global equity strategist at S&P Equity Research in New York, told Reuters.
The latest data confirmed expectations that the European Central Bank will lower its key interest rate following a meeting of its policy makers on Thursday.
Economic confidence in the euro zone fell more than forecast. An index of executive and consumer sentiment slid to 88.6 in April from a revised 90.1 in March, according to European Commission data.
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