China gives markets a lift at end of bruising week

An investor looks at the stock price monitor at a private securities company on July 4, 2012, in Shanghai, China.
AP Photo

LONDON Markets were ending the week solidly after better-than-expected trade figures from China provided new evidence of an upswing in the world's second-largest economy.

Japanese shares tanked, though, as the yen rallied on reports that the country's finance minister thinks the recent fall in the currency may have been too fast. Confirmation of an eighth straight quarterly loss for Sony worsened matters.

But elsewhere, the main focus appeared to be Chinese government figures showing the country's exports rose 25 percent in January from a year earlier while imports soared 28 percent. A large part of the increase was due to companies rushing to fill orders before shutting down for up to two weeks for the Lunar New Year holidays that begin Sunday.

"Chinese data is once again driving sentiment," said Craig Erlam, market analyst at Alpari.

In Europe, the FTSE 100 index of leading British shares was up 0.4 percent at 6,256 while Germany's DAX rose 0.2 percent to 7,605. The CAC-40 in France was 0.6 percent higher at 3,621.

Wall Street was poised for a more modest opening with both Dow futures and the broader S&P 500 futures unchanged.

Stocks have had a fairly tough week after what had been a stellar January. Renewed jitters over the debt crisis in the eurozone, primarily related to the political situations in Spain and Italy, were blamed for much of the retreat. A pullback had also been anticipated as investors cashed in profits after many indexes hit multi-year highs.

"The sheer weight of new investor money in January combined with an almost irrational disregard to the risks saw equity markets soar," said Rebecca O'Keefe, head of investment at Interactive Investor. "However, it appears as if the brakes have been applied slightly."

Earlier, the yen was the focus of attention in Japan, where finance minister Taro Aso said the currency depreciation in recent weeks had been "too fast."

His comments contributed to a 1.3 percent fall in the dollar to 92.47 yen, and that heaped pressure on the Nikkei, which closed 1.8 percent lower at 11,153.16. Shares in Panasonic Corp. fell 5.4 percent while Sony Corp. plummeted 10.1 percent after reporting poor earnings figures.

"Aso's comment to reporters that the recent pace of yen weakening has been 'too fast' is presumably designed in part to defuse tensions ahead of the G-20 meeting next week," said Julian Jessop, chief global economist at Capital Economics.

The yen has fallen sharply in recent weeks as Japan's Prime Minister Shinzo Abe insisted that the country's central bank target a higher rate of inflation. The lower yen has helped boost Japanese shares as it makes the country's exports cheaper.

The new policy approach by the Japanese government has had huge repercussions across foreign exchange markets and has rekindled talk of a global currency war.

The euro has been one currency that's gained as the yen has fallen. That advance came to a grinding halt on Thursday, when European Central Bank president Mario Draghi said his bank was monitoring the impact of the euro's appreciation on the eurozone economy. Europe's single currency was trading 0.1 percent higher at $1.3406 Friday, having fallen to a two-week low of $1.3369 the day before.

Elsewhere in Asia, Hong Kong's Hang Seng rose 0.2 percent to 23,215.16 while South Korea's Kospi advanced 1 percent to 1,950.90. Benchmarks in mainland China also rose.

Oil prices were tracking equities higher, with the benchmark New York rate up 28 cents at $96.11 a barrel.