M&A activity drives world stocks higher
LONDON » World stock markets closed higher yesterday, with European indexes buoyed by merger and acquisition activity, while U.S. markets were closed for Martin Luther King Jr. Day holiday.
Sentiment was also supported by the gain in U.S. markets Friday, when the Dow Jones industrial average marked its 24th record close since the start of October.
Most Asian markets gained ground, with Hong Kong's benchmark index returning above the 20,000 level, boosted by broad gains in the Japanese and Chinese bourses.
The Hang Seng Index surged 2.3 percent to close at 20,068.56, while Tokyo's Nikkei 225 index advanced 0.90 percent to close at 17,209.92.
In Hong Kong, analysts expect strong selling pressure near current levels in the benchmark index this week ahead of expected strong economic data in the U.S., and an anticipated interest rate hike in Japan.
"These developments show that there's growing inflationary pressure, which will likely have a negative impact on the market," said Castor Pang, strategist at SHK Financial Ltd.
Property and China-related shares outperformed the market's rally, boosted by the strength in regional bourses.
Japanese shares rose for a second day on upbeat machinery orders and Wall Street's continuing rally while Chinese shares posted its biggest one-day advance in a year and a half. Japanese machine orders -- widely regarded as a leading indicator of corporate capital investment -- surged 3.8 percent in November from October.
"Japan really doesn't have any specific problems right now so we're seeing the market catch up after underperforming last year," said Jeremy Hall, a fund manager with Henderson Global Investors.
Britain's FTSE 100 Index rose 0.4 percent to 6,263.50, while Germany's DAX Index gained 0.4 percent to 6,731.74 and France's CAC 40 gained 0.2 percent to 5,631.
It was a busy day for merger activity, with General Electric Co. agreeing to buy the aerospace business of Smiths Group PLC, Britain's third-largest aerospace company, for $4.8 billion in cash.
Smiths also said it will return $2.1 billion to shareholders, sending the company's shares up 11.1 percent to close at 1,094.5 pence ($21.44) on the London Stock Exchange.
Time Warner Inc.'s AOL also said it is making a $900 million cash bid to buy Swedish online marketing specialist TradeDoubler in an effort to improve its Internet advertising in Europe. TradeDoubler shares gained 14.7 percent to 227 kronor ($32.31) in Stockholm.