Global stocks enjoy modest pre-Christmas lift

By Toby Sterling

Associated Press

Published: Tuesday, Dec. 24 2013 9:01 a.m. MST

Global stocks posted further gains Tuesday as concerns over a cash crunch in China eased. Trading volumes were light in shortened Christmas Eve sessions.

Shizuo Kambayashi, Associated Press

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AMSTERDAM — Global stocks posted further gains Tuesday as concerns over a cash crunch in China eased. Trading volumes were light in shortened Christmas Eve sessions.

Most markets have been strong in general over the past week following figures showing the U.S. economy is performing better than expected.

The advance has come despite the Federal Reserve's decision to start reducing its monetary stimulus by $10 billion to $75 billion from January. Many had feared the decision to rein in its policy of quantitative easing, or QE, would be negative for stocks as the stimulus, in its various guises, has shored up markets over the past few years.

"Earlier fears that the Fed calling time on QE would knock the potential for a classic Santa rally certainly don't seem to be living up to expectations," analysts at Monex Capital Markets said.

In Europe, Britain's FTSE 100 index closed up 0.2 percent to 6,694.17, while France's CAC 40 rose 0.1 percent to 4,218.41. The German stock market, which hit a record high Monday, was closed.

U.S. stocks were poised for a flat session despite strong durable goods orders figures for November. The Dow Jones industrial average and the S&P 500 index have also struck record highs over the past few sessions amid hopes over the U.S. economy. As in Europe, the trading day is shortened ahead of the Christmas break.

Earlier, Asian stocks advanced Tuesday after the People's Bank of China injected 29 billion yuan ($4.8 billion) into Chinese banks. Analysts believe the banks have been hording cash ahead of year-end to meet higher regulatory requirements.

Several spikes in bank-to-bank lending rates caused concern among investors that a cash shortage could force banks to restrain commercial lending and pressure the world's second-largest economy.

The rate banks charge each other for a one-week loan had surged as high as 9.8 percent on Monday, but they dropped to 6.2 percent Tuesday.

Tokyo's Nikkei 225 index inched up 0.1 percent to 15,889.33, after briefly surpassing the 16,000 level for the first time in six years in the morning session. China's Shanghai Composite added 0.2 percent to 2,092.91. Hong Kong's Hang Seng index gained 1.1 percent to 23,179.55.

In the currency markets, the euro was 0.2 percent weaker at $1.3671 while the dollar also rose 0.1 percent to 104.28 yen. In the oil markets, a barrel of benchmark crude was 24 cents higher at $99.15.

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AP business writer Youkyung Lee contributed to this story from Seoul, South Korea.

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