By TOBY STERLING, Associated Press
AMSTERDAM (AP) — Global stocks were higher Friday as Asia rebounded from a sharp selloff, and US markets edged higher on a modest improvement in industrial production data.
Brenda Kelly, Senior Market Strategist at IG Markets said she sees "signs of exhaustion" in the overall downward trend for the world's stocks, which was prompted by fears the U.S. Federal Reserve might wind down its bond-buying program and that the Bank of Japan has done all it is prepared to do to stimulate the Japanese economy.
But "the suggestion from the Bank of Japan minutes overnight was that more aggressive action could occur, should the policymakers deem it necessary," she said, and "it is extremely unlikely that Federal Reserve President Ben Bernanke will hurry to completely remove the liquidity punchbowl."
Still, observers agreed markets are likely to remain anxious until the Fed meets next Wednesday.
In Europe, Britain's FSTE 100 rose 0.5 percent to 6,321.94. France's CAC-40 gained 0.8 percent to 3,827.58 and Germany's DAX rose 1.0 percent to 8,177.58.
U.S. markets were modestly higher after strong gains Thursday, with the Dow Jones Industrial Index up 0.2 percent to 15,198.50, and the S&P 500 down fractionally at 1.636.00.
The University of Michigan index of consumer sentiment fell to 82.7, slightly worse than expected, but Federal Reserve data showed U.S. industrial output increased 0.1 percent in May after declining 0.4 percent in April.
In Asia, Tokyo's Nikkei 225, the regional heavyweight, gained 1.9 percent to close at 12,686.52, recovering some of its losses after a 6.4 percent plunge on Thursday.
China's benchmark Shanghai Composite Index gained 0.6 percent to 2,162.04, coming off its lowest close in six months following Thursday's 2.8 percent slide. Hong Kong's Hang Seng gained 0.4 percent to 20,969.14 and Seoul added 0.4 percent to 1,889.24. India's Sensex rose 1.6 percent to 19,126.03.
Stephen Lewis, Chief Economist at Monument Securities said markets will remain anxious until the Federal Reserve meeting next Wednesday. Fed Chairman Ben Bernanke is expected to give more information about whether the Fed intends to "taper" or slow, its asset purchase program.
"The fear that Mr Bernanke and his colleagues will not taper... indeed dare not taper, may be as significant an element in the current market malaise as anxiety that they will," he said in a note.
He said if the Fed doesn't slow purchases, people will be worried the market's rise in the first part of the year isn't sustainable. But if it does slow purchases, the market is likely to continue its more recent slide.
"Either way, carefree days would be over," he said. "The market has realized it is difficult to write a happy ending to this story."
Japanese markets have weakened following a burst of euphoria over Prime Minister Shinzo Abe's economic turnaround plan. Markets had surged 50 percent since the start of the year but doubts are mounting about whether Abe's plan will work.
The Nikkei's plunge Thursday took the Japanese market to a 20 percent decline from its May 22 high — the definition of a bear market.
In currency markets, the euro declined to $1.3329 from $1.3345 late Thursday in New York. The dollar was 0.2 percent weaker at 95.20 yen.
Benchmark oil for July delivery rose strongly, up $1.26 to $97.95, gaining on tension in the Mideast after U.S. President Barack Obama's decision to arm Syrian rebels.
Associated Press Business Writer Joe McDonald contributed to this story from Beijing.
Toby Sterling is @lbsterling on Twitter.
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