BANGKOK (AP) — World stocks climbed Wednesday, bolstered by receding inflation in China and Italian Prime Minister Silvio Berlusconi’s promise to resign once a new budget is passed that could prevent the country becoming engulfed in a debt crisis.
Benchmark oil rose to nearly $97 per barrel as the Chinese inflation numbers reinforced expectations that the world’s second-largest economy can continue robust growth and strong demand for crude. The dollar gained against the euro but slipped against the yen.
European shares advanced in early trading on the heels of broad gains in Asia, where Japan’s Nikkei 225 index rose 1.2 percent to close at 8,755.44. Britain’s FTSE 100 gained 0.4 percent to 5,587.13, Germany’s DAX rose 1.1 percent to 6,027.96, and France’s CAC-40 added 0.6 percent to 3,163.50.
But Wall Street was set to fall, with Dow Jones industrial futures losing 0.4 percent to 12,076 and S&P 500 futures dropping 0.6 percent to 1,265.90.
Italy became a key focus for investors this week after doubts emerged that the country would go through with a tough package of austerity measures. Many investors saw Berlusconi as an obstacle to sweeping economic reforms needed to help Italy avoid sinking into a debt crisis.
Berlusconi is the second recent political casualty of the European debt crisis. In Greece, a new interim government — one that won’t be led by the current prime minister, George Papandreou — is to be announced Wednesday. New leadership was needed for the passage of an austerity plan in Parliament that would entitle debt-laden Greece to euro130 billion ($179 billion) in new European rescue money.
Some analysts said the political shakeup in Italy won’t stem the tide of debt the country faces. Italy’s borrowing cost spiked to nearly 7 percent this week. That number is important because Greece, Portugal and Ireland were forced to receive financial lifelines after their rates rose above 7 percent. Unlike those countries, Italy is too large to be bailed out by its European neighbors.
“It doesn’t matter who the politician is. They still have the same debt,” said Martin Hennecke, associate director of investment advisers Tyche Group in Hong Kong. Greece’s situation is “peanuts” compared to the financial devastation that could be wrought should Italy default.
“That would sink the whole eurozone rescue process in an instant. That would sink France, too, because of the exposure of French banks to Italy. It’s about seven times more than their exposure to Greece,” Hennecke said.
Yet the optimism generated by Europe’s efforts to contain its debt crisis led investors to plow money back into emerging market equity funds, which posted their biggest weekly inflow since early April, according to Cambridge, Massachusetts-based fund tracker EPFR Global.
For the week ending Nov. 2, equity funds posted net inflows of $4.9 billion for the week. Emerging market funds took in 70 percent of that total, EPFR said.
Among Asian markets, South Korea’s Kospi added 0.2 percent to 1,907.53 and Hong Kong’s Hang Seng jumped 1.7 percent to 20,014.43. Australia’s S&P/ASX 200 rose 1.2 percent to 4,346.10.
Benchmarks in India, Indonesia, New Zealand and the Philippines were also higher, while those in Singapore, Taiwan and Thailand fell. Mainland China’s Shanghai Composite Index gained 0.8 percent to 2,524.92 and the smaller Shenzhen Composite Index rose 1.6 percent to 1,071.04.
Another market cue came from China, with the release Wednesday of data showing the country’s stubbornly high inflation fell in October as rapid rises in food costs eased. The decline was seen positively by investors as it gives Beijing more room to stimulate China’s economy.
Japan’s Olympus Corp. fell 20 percent as it may be booted off the Tokyo stock market after it admitted Tuesday it covered up investment losses dating back to the 1990s. Brokerage firm Nomura Holdings rose 4.1 percent, a day after hitting its lowest price of the year amid fears that securities companies might have been involved in the coverup.
Hong Kong-listed PetroChina Co. rose 3.3 percent and China National Offshore Oil Corp., known as CNOOC, gained 4 percent. In mainland China trading, China National Software & Service Co. gained 6.1 percent while several media companies hit the daily limit of 10 percent.
U.S. stock indexes fell early Tuesday after Berlusconi narrowly survived a confidence vote. But the market turned higher immediately after news reports said Berlusconi had promised to step down after economic reforms are passed, likely next week.
On Wall Street on Tuesday, the Dow Jones industrial average rose 0.8 percent to close at 12,170.18. The S&P 500 rose 1.2 percent to 1,275.92. The Nasdaq composite rose 1.2 percent to 2,727.49.
Benchmark crude was down 10 cents at $96.66 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.28 to settle at $96.80 on Tuesday.
In currencies, the euro slipped to $1.3789 from $1.3835 in late trading Tuesday in New York. The dollar fell to 77.67 yen from 77.70 yen.