LONDON — World stock markets mostly rose Monday ahead of a key policy statement from the U.S. Federal Reserve, though Japanese stocks continued to suffer in the wake of the yen's recent export-sapping appreciation against the dollar.
In Europe, the FTSE 100 index of leading British shares was up 73.87 points, or 1.4 percent, at 5,406.26 while Germany's DAX rose 84.40 points, or 1.4 percent, to 6,344.03. The CAC-40 in France was 57.96 points, or 1.6 percent, to 3,774.01.
Wall Street was poised to open higher — Dow futures were up 38 points, or 0.4 percent, at 10,651 while the broader Standard & Poor's 500 futures rose 3.7 points, or 0.3 percent, to 1,123.20.
On Friday, U.S. stocks managed to recoup most of the losses they suffered in the aftermath of figures showing that the U.S. economy shed 131,000 jobs in July, double market expectations.
The figures were another indication that the U.S. economic recovery from recession was grinding to a halt, and ratcheted up market expectations that the Fed will announce further stimulus measures to get the world's largest economy back on track, possibly as soon as Tuesday's meeting.
Most economists though think that the Fed will hold fire but will indicate in its statement that the U.S. economy has lost momentum over the coming months at a time when inflationary pressures are easing.
"While the market did move towards pricing in a Fed ease in the aftermath of the jobs data there is a strong force of opinion that the Fed is unlikely at this stage to announce significant new policy measures," said Jane Foley, research director at Forex.com.
"This opinion appears to be based both on the notion that the Fed has no incentive to shock the market and on the view that despite the weak labour data, most other economic indicators continue to suggest expansion, albeit at a moderating pace," Foley said.
While the Fed is facing some pressure to announce new policy measures, the European Central Bank is seemingly better positioned to continue withdrawing emergency programs introduced during the recession and the government debt crisis.
German trade data earlier showed Europe's economic powerhouse increasing exports by a massive 3.8 percent in June — another sign that the country is enjoying a strong export-led recovery.
Figures on Friday are set to show that the eurozone is growing at a faster pace than the U.S., largely because of the strong rebound in Germany — the consensus in the markets is that the 16 countries that use the euro grew by 0.8 percent in the second quarter from the previous three month period, even though some, like Greece, continue to contract. The figures on Friday are also set to show that Germany on its own grew by a quarterly rate 1.7 percent, a 20-year high.
In the current climate of uncertainty surrounding the Fed's policy, the dollar has taken a real drubbing in the foreign exchange markets, falling to multi-month lows against the euro and the yen.
Though the euro had given up some of Friday's post payrolls gains, it remains within striking distance of the three-month high of $1.3333. By early afternoon London time, the euro was down 0.3 percent at $1.3246.
The dollar also won some respite against the yen. Though it's up 0.2 percent at 85.58 yen, the dollar is not far off breaking below last November's 15-year low 84.81 yen.
The yen's rapid appreciation is clearly beginning to cause some concern in Japan. Finance chief Yoshihiko Noda has warned that the monetary authorities in Tokyo are watching developments in the foreign exchange markets closely — that's a hint that something may be done to stem the export-sapping appreciation in the yen.
"The market may be reluctant to get excessively on the yen strength bandwagon, particularly as the finance minister reminds markets again that he is paying close attention to the foreign exchange market," said Daragh Maher, deputy head of global foreign exchange strategy at Credit Agricole.
"And the pressure from corporate Japan to do something may be building as the pain is becoming more acute," he added.
The upward pressure on the yen was evident earlier with the news that China bought more Japanese government bonds than it sold in June for the sixth straight month.
The yen's appreciation continued to harm stocks — the benchmark Nikkei 225 stock average ended 69.63 points, or 0.7 percent, lower at 9,572.49.
Stocks elsewhere in Asia mostly rose. Hong Kong's Hang Seng advanced 0.6 percent to 21,801.59 and the Shanghai Composite Index rose 0.5 percent to 2,672.53. South Korea's Kospi gained 0.4 percent to 1,790.17 and Australia's S&P/ASX 200 climbed 0.6 percent to 4,594.90.
Benchmark crude for September delivery was up 85 cents at $81.55 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.31 Friday following the disappointing U.S. jobs data to settle at $80.70.
