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World Stocks Rise Despite US Govt Shutdown

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By The Associated Press

LONDON (AP) - World stock markets rose Tuesday despite the fact that the U.S. government was forced to partially shut down after Congress failed to approve a funding agreement.

The shutdown affects hundreds of thousands of federal workers and scores of agencies and operations. But some critical parts of the government, from the military to air traffic controllers, will remain open, and analysts said significant damage to the economy was unlikely unless the shutdown lasted more than a few days.

"Markets have become more and more rational over the last 24 months, particularly when they've seen central banks ... all working very closely together to make sure their economies are supported," said Evan Lucas, market analyst at IG in Melbourne, Australia.

Helping sentiment, a private industry group said that U.S. manufacturing expanded last month at the fastest pace since April 2011.

On Wall Street, the Dow was up 0.4 percent at 15,191.96 and the S&P 500 up 0.7 percent at 1,693.04.

In Europe, Germany's DAX advanced 0.9 percent to 8,670.15 while France's CAC-40 rose 1.1 percent to 4,189.13. Britain's FTSE 100 was flat at 6,460.36.

European stocks were also supported by figures showing unemployment across the eurozone stabilized in August, a further sign of economic recovery, and an easing of the political turmoil in Italy. The FTSE MIB in Milan jumped 2.7 percent on reports that Silvio Berlusconi's party will support the government.

The dollar, however, took a hit - it fell 0.2 percent against the Japanese yen, to 98.05 yen, while the euro rose 0.1 percent to $1.3535.

Earlier, in Asia, Japan's Nikkei 225 advanced 0.2 percent to close at 14,484.72 after the latest quarterly "tankan" survey showed a sharp improvement from the prior period. Large manufacturers were especially upbeat, with a reading of positive 12, up from 4 in the July survey.

South Korea's Kospi swung between gains and losses until finally settling 0.1 percent higher at 1,998.87. Australia's S&P/ASX 200 fell 0.2 percent to 5,206.80. Benchmarks in Singapore, Taiwan, Indonesia and New Zealand also rose. Malaysia fell.

Markets in mainland China and Hong Kong were closed for public holidays and couldn't react to a survey showing that manufacturing in the world's No. 2 economy barely expanded in September.

Tuesday's report by the China Federation of Logistics and Purchasing showed manufacturing expanded for the third month in a row. But the group's purchasing managers' index rose by only a fraction to 51.1 last month from 51.0 in August, less than economists expected.

Benchmark oil for November delivery was down $1.08 to $101.25 per barrel in electronic trading on the New York Mercantile Exchange. The contract grade fell 54 cents to close at $102.33 a barrel on Monday.

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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