LONDON — World markets rallied Thursday as investors grew increasingly confident that Ireland will receive a rescue package and General Motors Corp. made a big splash on its return to market less than a year and a half after it went bankrupt.
In Europe, the FTSE 100 index of leading British shares closed up 76.15 points, or 1.3 percent, at 5,768.71 while Germany's DAX rose 132.04 points, or 2 percent, to 6,832.11. The CAC-40 in France ended 75.62 points, or 2 percent, higher at 3,867.97.
In the U.S., the Dow Jones industrial average was up 170.81 points, or 1.6 percent, at 11,178.69 around midday New York time, while the broader Standard & Poor's 500 index rose 19.33 points, or 1.7 percent, at 1,198.76.
U.S. stocks were buoyed by General Motors' share offering, which drew a lot of interest. The company's share price jumped over 7 percent from their initial offering price of $33 and the company looked poised to raise over $23 billion.
Solid U.S. economic reports, including a buoyant survey from the Philadelphia Federal Reserve and the second consecutive decline in weekly jobless claims, also helped shore up confidence at the bell.
However, the main focus remained on Ireland as representatives from the European Union, the European Central Bank and the International Monetary Fund descended on Dublin.
Investors are hopeful that some sort of deal will be thrashed out, especially after the country's central bank governor Patrick Honohan said he expects the country will accept a loan worth tens of billions of euros and Britain, which is not part of the 16-nation bloc that uses the euro, offered to provide additional support.
"Risk appetite is firming up as dealers scour headlines emanating from Ireland on the growing likelihood of an imminent bailout package for the government as it struggles to contain the blood flowing from its battered banks," said Andrew Wilkinson, senior market analyst at Interactive Brokers.
The EU-IMF mission to the Irish capital is intended to identify the size of the hole in state and bank finances and the measures needed to reassure markets that Ireland won't default on debts.
Honohan, speaking in Frankfurt, said he expected the EU-IMF loan — if approved by the Irish government — would provide a financial "buffer" for Irish banks that would not be used.
The Dublin talks are expected to last several days.
The hope, at least among policymakers, is that an Irish package, which some estimate at around €80 billion ($110 billion), would calm markets and ease pressure on the euro.
Analysts remain skeptical that an Irish deal will put an end to the crisis that has engulfed the eurozone over the last year. If recent history is any guide, it's more than likely that another country could be targeted — under this domino effect, Portugal would be next, followed by even-bigger Spain.
"The to-ing and fro-ing about aid for Ireland has once again underlined that things are far from organized within the eurozone," said Lutz Karpowitz, a currency strategist at Commerzbank. "Should an agreement be reached quickly, which is completely open as there is no time frame, the euro might benefit short term but in the end the money for Ireland is not going to support the euro."
By late afternoon London time, the euro was up 0.6 percent at $1.3604. On Wednesday, it had fallen to a seven-week low of $1.3460 as uncertainty over Ireland lingered.
Greece, which has already been bailed out, unveiled more spending cuts to get its budget deficit down to 7.4 percent of gross domestic product in 2011 from this year's projected 9.4 percent — a cut of €5 billion.
The latest austerity budget includes spending cuts at loss-making state-run enterprises, healthcare and defense as well as tax hikes.
Even though the government is expected to get the next tranche of money from its €110 billion bailout facility, the outlook for the country's economy remains grim.
"With the economy is likely to remain in recession well beyond 2012, we think that the debt to GDP ratio could eventually exceed 170 percent of GDP, implying that a restructuring of government debt is eventually all but inevitable," said Ben May, European economist at Capital Economics.
Earlier in Asia, stocks advanced, particularly in Japan as exporters benefited from the weaker yen — by mid afternoon London time, the dollar was up 0.6 percent at 83.63 yen.
The Nikkei 225 stock average jumped 2.1 percent to close at 10,013.63 while Hong Kong's Hang Seng index closed up 1.8 percent at 23,637.39.
In China, the benchmark Shanghai Composite Index gained 0.9 percent to 2,865.45 while the Shenzhen Composite Index for China's second, smaller exchange jumped 1.8 percent to 1,260.59.
Benchmark oil for December delivery was up 84 cents to $81.28 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.90 to settle at $80.44 on Wednesday.
Associated Press writer Pamela Sampson in Bangkok contributed to this report.
- Two Christian ministers refuse to perform...
- Wyoming prepares to legalize same-sex marriage
- Lower gas prices could mean economic impact...
- Q&A: Journalist Dan Rather speaks on courage...
- 2 dead in shooting attack at Canada's Parliament
- Jurors given conflicting views of Jodi Arias
- Government ups air bag warning to 7.8M vehicles
- CVS tacks tobacco payment to prescription...
- Two Christian ministers refuse to... 109
- New Ebola 'czar' knows Washington, but... 22
- On campaign trail, Obama says GOP is... 16
- Wyoming prepares to legalize same-sex... 16
- Gay marriage becomes legal in Arizona,... 14
- Bishops scrap welcome to gays in sign... 10
- Expelled Nazis got millions in Social... 10
- At rallies, Obama casts 2014 as key for... 8