Euro buoyant in run-up to G-20 meeting
LONDON—Optimism over the U.S. economy and an easing in Europe's debt crisis supported stocks and the euro on Friday, ahead of a weekend meeting in Mexico of the finance ministers from the world's 20 leading economies.
With Greece pressing ahead with demands to get its hands on a euro130 billion ($173 billion) bailout, market concerns over an imminent default by the country have diminished, and that's helped the euro spike to near 11-week highs.
Europe's currency has generally been well-supported since the end of 2011 in the wake of the European Central Bank's last offering of super-cheap long-term loans to banks. Another three-year offering is planned for next Wednesday.
By late-afternoon, the euro was trading up 0.7 percent at $1.3461, its highest level since Dec. 8.
The euro has also garnered strength from the improvement in risk appetite in the markets -- when investors are inclined to take on more risk in their portfolios, the euro often rises against the dollar.
"Apart from a tremendous amount of bears having to admit defeat on outlandish calls for $1.20 and even parity with the dollar, the euro is rising ahead of next week's second round of three-year auctions from the ECB," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co.
Markets were also buoyed by an improvement in economic expectations, particularly in the U.S. jobs market. Economic recovery in the U.S. is hugely important for wider world because it could help offset a slowdown in Europe, further ease debt concerns there and shore up confidence in global markets.
Last summer, when Europe's debt crisis became particularly acute, worries over the U.S. economy, symbolized best by Standard & Poor's decision to strip the world's largest economy of its triple A rating, fueled the turmoil in the financial markets.
In 2012, many of the world's leading indexes were back at levels they were trading at before last summer's massive sell-off.
On Friday, Germany's DAX closed 0.8 percent higher at 6,864.43 while the CAC-40 in France ended up 0.6 percent at 3,467.03. However, the FTSE 100 index of leading British shares dipped almost 0.1 percent to 5,935.13.
In the U.S., the Dow Jones industrial average was up 0.1 percent at 13,001.98 while the broader Standard & Poor's 500 index rose 0.3 percent to 1,367.55.
Over the weekend, investors will be interested in developments at a meeting of the G-20 finance ministers and central bank governors in Mexico. While the gathering will focus on promoting global economic stability and growth, Europe's debt crisis will remain a key topic.
In particular, European officials will press for countries like the U.S., China and the U.K. to allow the International Monetary Fund to contribute more money to eurozone rescue measures. Several countries are reluctant, however, to expose the IMF to more risk in Europe.
Earlier in Asia, Japan's Nikkei 225 climbed 0.5 percent to close at 9,647.38 and South Korea's Kospi added 0.6 percent to 2,019.89. Hong Kong's Hang Seng rose 0.1 percent to close at 21,406.86.
Mainland Chinese shares were boosted by speculation local governments would relax restrictions on the property market and monetary authorities would tweak policy to stimulate growth.
The benchmark Shanghai Composite Index climbed 1.2 percent to 2,439.63, its highest close in more than 3 months. The smaller Shenzhen Composite Index gained 1.4 percent to 972.62. Shares in real estate, cement and coal minters led the advance.
One growing concern is the price of oil, which has been driven higher by tensions over Iran and the weakening dollar -- kept Asian markets in check because of worries it could crimp the U.S. economic recovery.
Benchmark crude for April delivery was up 38 cents to $108.21 in electronic trading on the New York Mercantile Exchange.
Kelvin Chan in Hong Kong contributed to this report.