By TOBY STERLING, Associated Press
AMSTERDAM (AP) — Global markets surged Friday as a year-end rally continued on good news for stocks out of Japan and China, and the afterglow of a report that showed U.S. unemployment benefit claims are falling.
European stocks resumed their pre-Christmas rally and finished the week on a strong note, with Germany's DAX index making a record close.
European investors appeared to be switching preferences from bonds to stocks, as 10-year bond prices dipped but stock markets made solid gains. The DAX closed 1.1 percent higher at 9,589.39. Britain's FTSE 100 rose 0.8 percent to 6,750.87. And France's CAC jumped 1.4 percent to 4,277.65.
The gains came despite a two-day rally in the euro that sent it briefly to almost $1.39 — its highest level since 2011 — after German European Central Bank representative Jens Weidmann was quoted by the Bild newspaper as saying that weak inflation alone is no reason to keep interest rates low.
In the U.S., markets were flat on low volumes after sharp rises Thursday. At noon the Dow Jones Industrial Average index was a fraction of a percent higher at 16,485.98, while the broader S&P 500 was fractionally lower at 1,841.57.
IG Markets analyst David Madden said U.S. Labor Department statistics released Thursday showed a fall in unemployment compensation claims, which is "further proof that the U.S. economy is growing."
In Asia, Japan's benchmark index hit a five-year high amid growing signs of inflation.
Tokyo's Nikkei index erased early losses to close slightly higher at 16,178.14, after the country's statistics bureau said prices rose 1.2 percent on an annual basis in November, the fastest rate since 2008. The yen weakened to 105 to the dollar, also for the first time since 2008, which should help boost exports.
The Nikkei has now risen more than 50 percent since January 2013.
Hong Kong's Hang Seng index rose by 0.2 percent to 23,231.86, and China's Shanghai composite gained 1.4 percent to 2,199.06, after the Chinese Cabinet said this year's economic growth would be 7.6 percent, down slightly from last year's 7.7 percent. Fears of a sharp slowdown in the world's second-largest economy had fueled market jitters earlier in the year.
The Chinese news rippled through commodity markets, and in New York shares of mining giant Rio Tinto Ltd. were one of the stronger gainers, up 1.6 percent.
"The simple fact is that the Dow Jones Industrial Average has gained 23 percent this year, while the growth rate of the economy picked up to 4.1 percent in the fourth quarter," said Neil Mellor of BNY Mellon Global Markets. With U.S. Federal Reserve monetary policy "likely to remain accommodative well into 2015, it could be argued that these trends should continue over the course of 2014."
However, he said he remains cautious about prospects for emerging markets.
South Korea's Kospi index edged 0.2 percent higher to 2,002.20, while Taiwan's Taiex rose 0.6 percent to 8,535.04. The Sensex index on India's Bombay Stock Exchange was up 0.7 percent to 21,219.40.
In foreign exchange markets, the dollar was trading at 105.06 Japanese yen, while the euro was more than a cent off its earlier highs at $1.3767.
Oil prices surged above $100 Friday, as violence in South Sudan has stoked concerns about the African nation's oil production. Benchmark U.S. oil for February delivery was up 91 cents to $100.46 in electronic trading on the New York Mercantile Exchange.
Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.