World stocks rise amid Europe deal hopes

World stocks rose today amid growing optimism that European leaders will approve aggressive plans by the end of the week to rescue the region from a debt crisis that has rocked financial markets for months.

Benchmark oil rose above 101 dollars per barrel, while the dollar fell against the euro and the yen.

European stocks tracked earlier gains in Asia. Britain's FTSE 100 rose 0.9% to 5,617.16, Germany's DAX added 1.4% to 6,110.91 and France's CAC-40 climbed 1.5% to 3,227.68.

Wall Street also appeared set for advances, with Dow Jones industrial futures rising 0.8% to 12,210 and S&P 500 futures gaining 0.8% to 1,265.40.

In Asia, Japan's Nikkei 225 jumped 1. % to end at 8,722.17 - its highest close in a month. South Korea's Kospi added 0.9% to 1,919.42 and Hong Kong's Hang Seng gained 1.6% to 19,240.58.

Mainland Chinese shares edged higher, with the benchmark Shanghai Composite Index climbing 0.3% to 2,332.73, ending a five-session losing streak.

Sentiment was boosted by a report that European leaders might create a second bailout fund to supplement the one they have already agreed to. The second fund would nearly double the capacity of Europe's financial rescue programmes, the Financial Times reported.

The plan involves allowing the existing 440 billion euro (£377 billion) bailout fund to continue running when a new 500 billion euros (£428.4 billion) facility comes into force in mid-2012, almost doubling the rescue system's firepower, Stan Shamu of IG Markets wrote in a report. "This latest move might just be the 'bazooka' Europe needs to appease markets."

Shares in camera and medical equipment maker Olympus fell 5.2% in Tokyo, a day after an independent panel determined that the company had falsified accounting records to cover up huge investment losses from the 1990s. The company risks being removed from the Tokyo Stock Exchange.

But other Japanese exporters posted solid gains. Sony jumped 5.9% and Ricoh climbed 3.4%.

Japanese shipper Mitsui OSK Lines surged 11.2% after an agreement with four other tanker owners to jointly operate very large crude carriers, known as VLCCs, starting early next year, Kyodo News Agency reported.

In Australia, markets were helped by data showing the economy grew by 1% in the September quarter. An interest rate cut by the Reserve Bank of Australia yesterday, which raised hopes of more consumer spending, helped retail shares. Woolworths rose 1.9% and surfwear maker Billabong International gained 3.1%.

Trading volume was light in Hong Kong, where a slew of flotations (IPOs) devoured much of the available investment funds and sentiment leaned toward caution as the end of the year approaches.

"I think a lot of people, a lot of funds, have effectively closed their books for the year and are trying to protect the gains that they made, and also a lot of retail money is tied up in IPOs, so it makes for thin trading," said Andrew Sullivan, principal sales trader at Piper Jaffray in Hong Kong.

In mainland China, shares in information technology, financial, environmental protection and biotechnology companies advanced while shares in steel related companies weakened. Ping An Insurance gained 3% while Shanxi Securities gained 1.7%.

China is due to release economic data for November, including inflation, on Friday. Peng Yunliang, an analyst based in Shanghai, said the inflation rate should have eased to below 5%. That would give Beijing more leeway to ease credit controls as risks to growth from Europe's debt crisis mount.

Hopes that Europe was finally serious about taming its debt crisis boosted US stocks yesterday. The Dow Jones industrial average closed up 0.4% at 12,150.13, the Standard & Poor's 500 index closed up 0.1% to 1,258.47 and the Nasdaq composite average closed down 0.2% at 2,649.56.

Benchmark crude for January delivery was up 51 cents to 101.79 dollars a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 29 cents to settle at 101.28 dollars yesterday.

In currency trading, the euro rose to 1.3445 dollars from 1.3414 dollars late yesterday in New York. The dollar fell to 77.66 yen from 77.70 yen.

AP