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Global shares extend rally

LONDON - Asian and European stock markets rallied on Wednesday as investors took their cue from bumper gains on Wall Street and some rare good news on the ailing US housing market.

In late morning European trade, Frankfurt jumped 1.12 percent, London added 0.63 percent and Paris climbed 1.10 percent, after solid gains in Asia. Hong Kong won 2.3 percent and Tokyo jumped 2.73 percent.

US stocks closed solidly higher on Tuesday as investors weighed a positive housing market report and a mixed batch of corporate earnings.

"A recovery on Wall Street during the latter part of yesterday's session looks set to help lock in gains in Europe," said CMC Markets dealer Matt Buckland.

European stocks had rebounded Tuesday amid hopes for progress on the US government's stimulus plan, winning back ground lost on Monday when stocks were dragged down by the troubled banking sector.

"The pattern we've seen played out so far this week -- Monday's losses essentially being reversed just 24 hours later -- underlines the fact that the market is still lacking any solid direction and uncertainty still looks set to prevail for some time yet," added Buckland.

However, the global downturn cast a shadow over markets after electronics giant Panasonic said on Wednesday that it would cut 15,000 jobs and close dozens of plants worldwide as it falls deep into losses for the year.

And in a further dose of bad news, Icelandic retailer Baugur, which holds stakes in British high street retailers House of Fraser, French Connection and Debenhams, said it had applied for bankruptcy protection.

"Yesterday's (US) home sales data may have given us a boost but overall stocks are range-bound," added Martin Slaney, head of derivatives at GFT.

"We need clarity on the economy and clarity on bailout packages and until then a lot of money is being side-lined."

In earlier Asian trade on Wednesday, the Tokyo Stock Exchange's benchmark Nikkei-225 index gained 213.43 points to end at 8,038.94.

The uptick came after the National Association of Realtors in the United States reported pending home sales rose an unexpected 6.3 percent in December, cheering up investors.

The market's robust rise was a natural rebound after a three-day losing streak, Hiroichi Nishi, a broker at Nikko Cordial Securities, told Dow Jones Newswires.

Hong Kong shares also rebounded sharply as hopes of new stimulus measures in China boosted sentiment, dealers said.

China-related stocks were responsible for driving the market up Wednesday following comments by Premier Wen Jiabao that raised expectations China will take fresh market-boosting measures, analysts said.

Wen said his government is studying ways to use its foreign-exchange reserves to serve China's needs, according to a transcript of a Financial Times interview with the premier, although he did not give any details.

Overnight, New York's Dow Jones Industrial Average rose 1.8 percent, recouping some losses after three straight declines.