The Associated Press
LONDON — Hopes that Japan's nuclear crisis may be coming under control supported stock markets Tuesday, despite signs of discord over the military strikes in Libya and mounting expectations that interest rates in Europe will rise soon.
Japan's Nikkei posted significant gains on its first trading day of the week — markets were closed Monday for a public holiday. Investors welcomed signs that authorities were stabilizing the Fukushima nuclear complex following the catastrophic March 11 earthquake that unleashed a tsunami, which slammed into the complex, causing major malfunctions and radiation leaks.
The Nikkei spiked 4.4 percent, or 401.57 points, to close 9,608.32, supporting global stock markets. However, gains elsewhere in the world were far more modest, a sign investors remain cautious following big stock gains in the past few days.
"It's looking like investors are showing signs that shares have got a little over extended in recent days, so it would not be a shock to see some easing back from current levels," said Will Hedden, a sales trader at IG Index. "Trading floor sentiment still remains cautious as the Libyan military campaign and intermittent interruptions to the work on the Japanese nuclear reactors continue to unsettle the markets."
In Europe, the FTSE 100 index of leading British shares was up 0.2 percent at 5,796 while the CAC-40 in France rose 0.4 percent to 3,920. Germany's DAX was more or less unchanged at 6,814.
Wall Street was poised for a steady opening following solid gains Monday — Dow futures were up 24 points at 11,987 while the broader Standard & Poor's 500 futures rose a little under 2 points to 1,,295.
Investors' appetite for riskier trades, such as stocks, was weighed down in recent weeks by the confluence of alarming events around the world. On top of Japan's natural disasters, investors had to grapple with the potential implications of a nuclear meltdown and escalating conflict in Libya.
In Libya, coalition forces including the U.S., Britain and France launched another wave of strikes to protect civilians from government troops and to enforce a no-fly zone.
However, discord has erupted in Europe over whether the military operation in Libya should be controlled by NATO. Turkey temporarily blocked the alliance's participation while Italy issued a veiled threat to withdraw the use of its bases unless the alliance was put in charge. Germany also questioned the wisdom of the operation, and Russia's Vladimir Putin railed against the UN-backed airstrikes mounted so far against Moammar Gadhafi's forces.
The prospect of a longer shutdown in oil production in Libya, which accounts for a little under 2 percent of global crude supplies, kept oil prices at high levels. A barrel of crude as traded on the New York Mercantile Exchange was down 22 cents at $102.87 while the equivalent Brent rate in London fell 28 cents a barrel to $114.63.
In the currency markets, both the euro and the British pound were supported by mounting expectations that both the European Central Bank and the Bank of England will raise interest rates next month.
ECB officials, including its president Jean-Claude Trichet, this week reiterated their concerns over inflation, signaling a rate hike can still be expected as early as April. Analysts also said the Bank of England will find it difficult not to raise its main interest rate from the record low of 0.5 percent in the next couple of months after figures Tuesday showed consumer price inflation hit 4.4 percent in February — more than double the Bank's target of 2 percent.
By mid-morning London time, the pound was 0.5 percent higher at $1.6390, just shy of its earlier 15-month high of $1.6397.
The euro has also been supported by signs that EU officials are finally getting a handle on the debt crisis that has already seen Greece and Ireland get bailed out.
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