First-quarter earnings report by Lowe's boosted hopes among investors that the worst of the U.S. recession is over.
World stock markets recovered early losses Monday after Lowe's, the second biggest U.S. home improvement chain, said first-quarter profit fell less than feared.
The report boosted hopes among investors that the worst of the U.S. recession is over and offset weak earnings news out of Asia, which had weighed on markets early in the day. Standing out Monday was India's stock market, which vaulted more than 17 percent higher on the results of elections over the weekend.
In afternoon European trading, Germany's DAX was up 1.1 percent at 4,789.35 and Britain's FTSE 100 was 1.2 percent higher at 4,400.69. France's CAC 40 rose 0.7 percent to 3,191.14. All of them had dropped as much as 1.0 percent after the open.
U.S. futures pointed to gains on Wall Street. Dow Jones industrial average futures rose 38, or 0.5 percent, to 8,305. Standard & Poor's 500 index futures rose 5.50, or 0.6 percent, to 888.50. On Friday, the two indexes had fallen 0.8 percent and 1.1 percent.
News that net profit at Lowe's Cos. fell to 32 cents per share in the quarter ended May 1, topping analysts' forecast of 25 cents a share, helped sentiment after two of Japan's leading companies — Panasonic and Mizuho Financial — reported colossal losses for the last fiscal year.
Price movements were limited as investors juggled backward-looking economic indicators — such as weak GDP data and earnings reports — with more forward-looking measures of business and consumer confidence, which have been on the rise.
"The rally in equity markets during March and April may hint that the optimists have won, but the fact that this has now petered out instead suggests that we have merely removed the extreme pessimism from the market," said Daragh Maher, deputy head of global forex strategy at Calyon.
Later Monday, investors will focus on figures from the National Association of Home Builders, which is set to release its index of builders' confidence for May.
On Tuesday, the ZEW index of German business sentiment will be watched for more gains, particularly after Friday's news that Europe's largest economy shrank by a stunning 3.8 percent in the first quarter.
The corporate data out of Asia was a reminder of the difficulties companies are still in. Shares in electronics giant Panasonic plummeted 7.6 percent after the firm announced late Friday a 378.96 billion yen ($4 billion) full-year loss and projected a steeper-than-expected net loss for the coming year.
Among banks, Mizuho Financial Group Inc., Japan's second-largest lender, shed 3.8 percent after posting a group net loss of 588.8 billion yen.
The rally in stock markets since early March has brought several indexes to positive territory year-to-date, but analysts say any more gains would require a real rebound in economic growth and corporate profits, not just slower declines.
"We need to see more signs of demand actually picking up and the economy improving. Without that, we're going to trade in a range or see more selling," said Yoji Takeda, who helps manage $1 billion in assets at RBC Investment Management in Hong Kong.
In India, however, investors sent the benchmark Sensex soaring 17.3 percent, forcing trading to be halted for the day, amid euphoria over the Congress Party's definitive victory in national elections. Markets are hoping that the new government will be more effective in leading the country through the global economic downturn and returning it to growth.
Elsewhere, Hong Kong's Hang Seng recovered early losses to gain 232.21, or 1.4 percent, to 17,022.91, while South Korea's benchmark shed 0.4 percent to 1,386.68. Shanghai's index rose 0.3 percent and Australia's stock measure was off 1 percent.
Oil prices hovered Monday around $57 a barrel in Europe as traders backed off last week's push to above $60 amid signs of weak crude demand. Benchmark crude for June delivery was up 96 cents to $57.30. The contract dropped $2.28 on Friday.
In currencies, the euro was somewhat higher, at $1.3499 from $1.3493 late Friday, while the dollar rose against the Japanese yen, to 95.84 yen from 95.26 yen.
