AFP, LONDON: Global stocks rose yesterday, with the London market now in a much better place than before Britain's vote to leave the EU, and others firmly on road to recovery.
Asian stocks led the way, ending the week with another rally on optimism that central banks globally will step up to support growth in the face of uncertainty caused by Britain's vote.
After the shock of the referendum result sent world markets into initial free fall last Friday, they have surged over the past week as authorities moved to soothe concerns another rout was imminent.
"European markets have started the day in a fairly positive fashion as we come to the end of what has been a turbulent and historic week," said Michael Hewson at CMC Markets.
"The FTSE 100 looks on course to post its best week since 2011 as the weaker pound helped pull the index back above its pre Brexit vote highs by the middle of the week," he said.
In mid-morning, the benchmark London index stood 0.2 per cent higher at 6,519.81, having opened 0.4 per cent up. This compares with its 6,338.10 on June 23, its last level before the British result was published.
The Paris and Frankfurt stock markets were also higher, but remained below their pre-Brexit
vote highs.
On Thursday, Bank of England boss Mark Carney became the latest to provide assurances, indicating policymakers could embark on fresh monetary easing -- raising the possibility of a cut in rates.
Carney, who had urged Britain to vote to stay in the EU, said "the economic outlook has deteriorated and some monetary policy easing will likely be required over the summer", although he said there were limits to what the bank could do.
His comments sent the pound tumbling, but provided the equity market with what Hewson called a "Carney bounce".
On Friday, Tokyo ended 0.7 per cent higher despite data showing weak confidence among Japanese businesses, while consumer prices dropped for a third straight month in June.
Sydney added 0.3 per cent and Seoul 0.9 per cent. Shanghai climbed 0.1 per cent, with dealers unmoved by figures showing China's manufacturing sector contracted last month.
- 'Mood for easing -
"The mood for more easing is likely to spread around the world, and stock prices are headed up," Juichi Wako, a senior strategist with Nomura Securities Co, said.
"It's not to say that the crisis has now turned into a blessing, but the heightened sense of urgency
among authorities will allow
market-favourable policy responses to continue."
While markets are on the rise, analysts remain cautious about the long-term effects of Britain's exit from a four-decade partnership with one of the world's biggest trading blocs.
The International Monetary
Fund described the Brexit as a major threat to world growth and Standard & Poor's cut its credit rating for the EU by one notch to AA, its third highest level.
Eurozone unemployment fell to a near five-year low in May, official
data said on Friday, in a rare
positive sign for a sluggish European economy struggling to return to
solid growth.
While analysts welcomed the drop, they also predicted that it is not enough to reverse central bank thinking that more credit easing is needed to support economies.
"Despite May's decline, the eurozone unemployment rate remains too high to generate meaningful inflationary pressure," Stephen Brown, European Economist at Capital Economics, said.
"We still think that the ECB has a lot more work to do if it is to stand any chance of hitting its inflation target in the medium term," he added.