World shares rally as G-20 chiefs thrash out growth remedies

  IMF Managing Director Christine Lagarde attends the opening ceremony of the G-20 finance ministers and central bank governors meeting in Shanghai. (Reuters)

AGENCE FRANCE PRESSE

LONDON: Global stock markets rallied Friday helped by firmer oil prices and brighter-than-expected US growth data, as finance and banking chiefs from the world’s leading economies began talks.
European bourses followed a strong showing by Asia’s main indices as G-20 finance ministers and central bankers gathered in Shanghai to thrash out remedies to kickstart growth.
In mid afternoon trading Frankfurt’s DAX led the way, at nearly two-percent higher, followed closely by shares in Paris and London.
US stocks also edged higher after opening, cheered by an upgrade to the US economic growth estimate for the fourth quarter of last year.
“Investors are cautiously optimistic as we see out the week, but there will no doubt be many more twists and turns on the road ahead,” said Mike McCudden, head of derivatives at stockbroker Interactive Investor.
“With the G-20 summit... and high expectations of bullish comments from the forum, investors are taking their cue to move with the hot air and push stocks higher.
“The oil price is the major motivator for movement,” he added.
Benchmark oil contract Brent North Sea crude rose back above $36 a barrel on Friday, boosting shares in energy companies.
Market-wide rallies came as officials from the Group of 20 industrialized nations gathered for a two-day meeting, with China’s sagging growth expected to loom over the discussions.
Shanghai’s main stocks index rose almost one percent Friday after the head of the People’s Bank of China said the economy was strong and signalled authorities could do more to help stimulate growth.
Shanghai had plunged more than six percent on Thursday, hit by tightening liquidity and concerns a rally that has added 10 percent since mid-January was overdone.
Chinese shares have been on a rollercoaster ride since a debt-fueled bubble burst last year, while cooling growth in the key importer of raw materials has sent commodity and energy prices spinning.
Pressure has meanwhile been mounting for central banks to let loose their monetary firepower to stimulate growth and reassure investors, after financial markets posted one of the worst starts to the year in living memory.
Japan has already adopted negative interest rates, the European Central Bank has embarked on its own huge stimulus program, and the US Federal Reserve has signalled possible delays to interest rate rises.
But German Finance Minister Wolfgang Schaeuble set the stage for disputes at the Shanghai meeting when he said Europe’s largest economy opposes any G-20 fiscal stimulus package.
In Japan, news that inflation fell to zero in January also raised expectations the Bank of Japan could ramp up its massive central bank bond-buying program.
The news is a fresh blow for Prime Minister Shinzo Abe after three years of trying to kick-start growth with a raft of policies.
Back in Europe, Frankfurt stock exchange operator Deutsche Boerse on Friday revealed that in the proposed tie-up with the London Stock Exchange the merged group would be based in the British capital, adding however that a potential so-called Brexit could jeopardize the plans.
Britain is gearing up for a June 23 referendum when the country must decide whether to remain part of the European Union.