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Asian markets recover as US data offset flu fears

HONG KONG - Global stock markets recovered on Wednesday as better-than-expected U.S. data gave investors hope of a turnaround in the world’s largest economy and helped offset their fears of a swine flu pandemic.

After two days of declines, several major markets in Asian and Europe posted broad-based gains. Airline stocks, slammed in recent days amid worries about the disease’s toll on travel, rebounded sharply around Asia. The dollar strengthened against the yen, while oil prices were steady.

Investors were cheered after a closely watched measure of U.S. consumer confidence soared in April, suggesting Americans may be ready to spend again a boon for export-driven Asian countries. An easing in the pace of home price declines also boosted sentiment.

Worries about swine flu and its impact on a world economy still reeling from recession have consumed the market this week. Countries everywhere have warned against or slapped outright bans on travel to Mexico, where the vast majority of cases are located, as new infections cropped up in Germany, New Zealand and Israel in recent days.

While the rapid spread of the virus, suspected in more than 150 deaths in Mexico, continues to inspire caution, many investors are waiting to see whether the outbreak develops into a full-blown epidemic.

“There are more flu cases today, but it hasn’t seriously escalated yet,” said Nicole Sze, Singapore-based investment analyst Nicole Sze of Bank Julius Baer & Co., which manages about $300 billion in assets. “Until we see a serious escalation the markets will likely trade in a range and be more focused on the economy and earnings.”

As trading opened in Europe, Britain’s FTSE 100 edged up 0.4 percent, while benchmarks in Germany and France rose nearly 1 percent. Meanwhile, Wall Street futures signaled a higher open, with Dow futures up 44 points, or 0.6 percent, to 8,011, while S&P 500 futures were up 4.7 points, or 0.6 percent, to 856.50.

Earlier in Asia, South Korean shares led the region after the country posted a record current account surplus in March. The Kospi benchmark finished higher by 38.18 points, or 2.9 percent, to 1,338.42.

Chinese shares were helped by stronger earnings from China Petroleum & Chemical Corp., Asia’s largest refiner by capacity, and the country’s biggest coal producer, China Shenhua Energy. Also comforting investors were signs there was solid demand for stakes in top lender ICBC, sold by foreign companies this week, analysts said.

Hong Kong’s Hang Seng gained 401.84 points, or 2.8 percent, to 14,956.95, and Shanghai’s main index added 2.8 percent to 2,468.19. Markets in Singapore, India and Taiwan also gained. Australian shares closed modestly lower after a seesaw session.

Financial markets in Japan were closed for a national holiday and will reopen Thursday.

Investors sent Asian airline stocks skyward, with Hong Kong’s Cathay Pacific taking off 5.6 percent and Air China soaring over 11 percent.

The upbeat news about U.S. consumer sentiment also boosted exporters that rise and fall with American spending habits. Retail goods and textile trader Li & Fung, which supplies major American retailers, gained 7.2 percent in Hong Kong.

Investors around the world will be watching closely statements from the U.S. Federal Reserve after it wraps up a two-day meeting Wednesday. After the bank’s $1.2 trillion measures last month to kick start the economy including buying Treasury bonds the market is not counting on any major announcements. But analysts say the flu outbreak, along with continuing troubles at banks and credit markets, could elicit an unexpected response.

Overnight in New York, the consumer reading helped balanced out worries that large banks might need more capital following the government’s stress tests. The Dow Jones industrial average ended the day down 8.05, or 0.1 percent, to 8,016.95 after being down as much as 86 ahead of the consumer confidence report.

Broader stock indicators also lost ground. The Standard & Poor’s 500 index fell 2.35, or 0.3 percent, to 855.16.

Oil prices were up modestly in Asian trade, with benchmark crude for June delivery climbing 19 cents to $50.11. The contract slipped 22 cents to settle at $49.92 overnight.

In currencies, the dollar gained to 96.75 yen from 96.55 yen. The euro rose to $1.3194 from $1.3134.