Global markets rise as year-end rally continues

AMSTERDAM - Global markets surged Friday following a strong U.S. session and news seen as good for stocks from both Japan and China. Japan's benchmark index hit a five-year high amid growing signs of inflation.

"The simple fact is that the Dow Jones Industrial Average has gained 23 percent this year while the growth rate of the economy picked up to 4.1 percent in the fourth quarter," Neil Mellor of BNY Mellon Global Markets said in a note. With U.S. Federal Reserve monetary policy "likely to remain accommodative well into 2015, it could be argued that these trends should continue over the course of 2014."

He said he remains cautious about prospects for emerging markets.

Tokyo's Nikkei index erased early losses to close slightly higher at 16,178.14, after the country's statistics bureau said prices rose 1.2 percent on an annual basis in November - the fastest rate since 2008. The yen weakened briefly to 105 to the dollar, also for the first time since 2008, which should help boost exports.

The Nikkei has now risen more than 50 percent since January 2013.

Hong Kong's Hang Seng index rose by 0.2 percent to 23,231.86, and China's Shanghai composite gained 1.4 percent to 2,199.06, after the Chinese Cabinet said this year's economic growth would be 7.6 percent, down slightly from last year's 7.7 percent. Fears of a sharp slowdown in the world's second-largest economy had fueled market jitters earlier in the year.

In Europe, investors appeared to be switching preferences from bonds to stocks, as 10-year bond prices dipped but stock markets made solid gains. By mid-session Germany's DAX index was trading near record highs, rising 0.7 percent to 9,559.20. Britain's FTSE 100 rose 0.6 percent to 6,734.50 and France's CAC was up 1.0 percent to 4,259.48.

Friday's gains followed a strong session on Wall Street Thursday, when news that new U.S. unemployment benefit claims fell last week were taken as the latest sign the U.S. economy is gathering steam.

After a 0.8 percent gain to 16,479.88 Thursday, Dow Jones Industrial Average index futures were off 3 points ahead of Friday's session. The index has jumped 25.8 percent in 2013, and is on pace to have its best year since 1996.

South Korea's Kospi index edged 0.2 percent higher to 2,002.20, while Taiwan's Taiex rose 0.6 percent to 8,535.04. The Sensex index on India's Bombay Stock Exchange was up 0.7 percent to 21,219.40.

In foreign exchange markets, the dollar was trading at 104.82 Japanese yen, while the euro was up 0.8 percent to $1.3805.

Oil prices remained stable above $99 on Friday, as violence in South Sudan has stoked concerns about the African nation's oil production. Benchmark U.S. oil for February delivery was flat at $99.57 in electronic trading on the New York Mercantile Exchange.