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Stocks hold on to gains despite soft growth

LONDON (AP) — Markets were leaden-footed Thursday but mostly held on to big gains made this week, as investors continue to hope central banks will provide support to a weakening global economy.

This week investors have had to contend with largely disappointing U.S. economic data, notably a big slide in durable goods orders for March, as well as further confirmation of a slowdown in China, the world's second-largest economy.

However, sentiment has held up largely because investors think the world's major central banks will continue with their super-easy and super-cheap monetary policies. That's increasingly the case in Europe, where investors think it's now almost definite that the European Central Bank will cut interest rates at its policy meeting next Thursday.

"The case for an ECB rate cut at the 2 May policy meeting is quite strong," said Neil MacKinnon, global macro strategist at VTB Capital.

Markets in Europe have been particularly buoyant over the past couple of days as a number of analysts changed their forecasts to predict a reduction in the ECB's main interest rate from the current record low of 0.75 percent.

After those sharp gains, stock markets were more subdued on Thursday, with Germany's DAX flat at 7,762 and the CAC-40 in France 0.3 percent lower at 3,831.

The FTSE 100 index of leading British shares was down 0.1 percent at 6,422 even though official figures showed the country's economy grew by a greater than anticipated quarterly rate of 0.3 percent in the first three months of the year.

Many in the markets were predicting that Britain would sink into its third recession in less than five years. But the rise eased expectations that the Bank of England will soon announce another big monetary stimulus. That worked against stocks but gave the British pound a lift — it was trading 1.1 percent higher at $1.5437 and near two-month highs.

"Sterling leapfrogged above the $1.54 level after the country dodged another quarter of negative growth," said David Madden, market analyst at IG.

The dollar was faltering against a range of currencies, with the euro up 0.4 percent at $1.3064. Against the yen, the dollar was 0.5 percent lower at 99.05 yen

Later, the focus in the U.S. will likely center on the weekly jobless claims figures, which could provide an insight into monthly nonfarm payrolls figures due next week. Another round of corporate earnings from the likes of Coca Cola and Exxon Mobil could also impact upon trading.

Ahead of the bell and the bulk of the economic and corporate news, Wall Street was poised for a steady opening, with Dow futures and the broader S&P 500 futures up 0.3 percent.

Earlier in Asia, Japan's Nikkei 225 rose 0.6 percent to close at 13,926.08 while Hong Kong's Hang Seng advanced 1 percent to 22,401.24. South Korea's Kospi added 0.8 percent to 1,951.60.

Oil prices were fairly flat too after recovering above $90 a barrel on Wednesday — the benchmark rate was up 23 cents at $91.66 a barrel.


Pamela Sampson in Bangkok contributed to this report.