Global Stocks Rise On Rate Hopes, Beijing Stimulus

Developers' stocks are among the big winners this week after China unveiled a raft of measures to support the property sector and other parts of the economy AFP

Stock markets mostly rose Friday as slowing US and European inflation raised hopes of more aggressive interest rate cuts and China took measures to boost its struggling economy.

All major European markets closed higher, locking in strong gains for the week.

In New York, the Dow and the wider S&P were higher in morning trading, with further gains held back by strong advances in previous sessions.

Earlier, the Hong Kong and Shanghai stock markets finished the week more than 10 percent higher, with Shanghai seeing its strongest weekly gain since 2008.

The US Personal Consumption Expenditures (PCE) index, which strips out volatile food and energy costs and is closely watched by the US Federal Reserve, rose 0.1 percent in August from the previous month. It was below analyst expectations.

"Inflation stayed in its cage last month, reinforcing ideas that the Federal Reserve has runway to sharply cut rates in coming months," Joe Mazzola, a strategist at Charles Schwab, said.

The Fed cut its main lending rates by 50 basis points earlier this month -- after four years of tight money policies -- and analysts expect further cuts at the next policy meeting in November.

US "inflation seems to be on a sustained path lower", said Bret Kenwell, US investment analyst at eToro trading platform.

For the Federal Reserve, he said, "it makes sense to turn their focus to the labour market, which has shown softness in recent months."

The tech-heavy Nasdaq index was slightly lower, pulled down by healthcare stocks after Acadia agreed to pay a fine to settle suits over contested Medicare claims.

Annual inflation slowed sharply in France and Spain in September, official data showed on Friday, fuelling speculation the European Central Bank (ECB) could also cut rates more aggressively than expected.

Meanwhile, in the latest in a slew of stimulus measures, Chinese officials said they had cut the amount of cash banks must hold in reserve in a bid to encourage lending -- a move that would pump more than $140 billion into financial markets.

A Bloomberg report Thursday said Beijing may pump a similar amount into the country's large state-run banks.

"The stimulus is aimed at shoring up China's economy which has been seriously damaged by a protracted slump in its property market," said David Morrison, analyst at Trade Nation.

"The hope is that these moves will help boost investor confidence, and lead to a sustained turnaround. It's certainly working in the short-term."

Besides expectations of lower rates, Europe's main stock markets were boosted by hopes of rebounding Chinese demand, especially for luxury products and cars.

In Frankfurt, BASF soared 7.2 percent after the German chemicals giant Thursday unveiled a major overhaul to focus on cost cutting and strengthening its core businesses.

In Paris, Ubisoft shares jumped 5.8 percent after Credit Agricole raised its stake to 11 percent -- making it the game company's largest shareholder.

In foreign exchange, the yen rallied against the dollar after Japan's ruling party elected a new leader, Shigeru Ishiba, who backs interest-rate hikes. The dollar was little changed against the euro.

Oil prices were little changed after suffering heavy losses this week on expectations of higher output by key producers.

New York - Dow: UP 1.0 percent at 42,602.47 points

New York - S&P 500: UP 0.1 percent at 5,750.73

New York - Nasdaq Composite: DOWN 0.3 percent at 18,138.39

London - FTSE 100: UP 0.4 percent at 8,320.76 (close)

Paris - CAC 40: UP 0.6 percent at 7,791.79 (close)

Frankfurt - DAX: UP 1.2 percent at 19,473.63 (close)

Tokyo - Nikkei 225: UP 2.3 percent at 38,829.56 (close)

Hong Kong - Hang Seng Index: UP 3.6 percent at 20,632.30 (close)

Shanghai - Composite: UP 2.9 percent at 3,087.53 (close)

New York - Dow: UP 0.6 percent at 42,175.11

Dollar/yen: DOWN at 142.83 yen from 144.87 yen on Thursday