LONDON - European and Asian markets rallied Friday near the end of a tumultuous trading week as investors took heart from Wall's Street's gains overnight and positive U.S. labor market data.
Investors welcomed details of a tax rebate for American consumers announced as part of President Bush's economic stimulus plan. The tax rebate will put $600 to $1,200 back into the pocket of most taxpayers.
"Some sense of normality seems to have returned to the markets this morning," said Victoria Savage, a trader at CMC Markets. "A higher close on Wall Street followed by a rally in Asian markets overnight came after news of a stimulus package for the U.S. economy boosted sentiment. This has fed through into European markets today."
London's FTSE 100 added 1.2 percent, Germany's DAX gained 1.8 percent to 6,944.38. France's CAC 40 climbed 1.2 percent.
"The markets are reacting to news that Bush and Congress have agreed to accelerate tax rebates for U.S. consumers so they can go out and buy more exports from Asia," said Francis Lun, a general manager at Fulbright Securities in Hong Kong.
U.S. stock index futures suggested that Wall Street would also advance. Dow Jones industrial average futures were up 56 points, or 0.45 percent, to 12,421, while Nasdaq Composite Index futures were up 19.50 points, or 1.1 percent, to 1,856.5.
Markets across Asia turned in robust gains, with stocks in Tokyo and Hong Kong nearly erasing steep losses suffered earlier this week.
Japan's benchmark Nikkei 225 average rose for a third day, surging 536.38 points, or 4.10 percent, to close at 13,629.16, while Hong Kong's Hang Seng Index jumped 6.7 percent to 25,122.37 points.
India's benchmark Sensex rose 6.8 percent, while markets in Australia, South Korea, Taiwan and the Philippines also put in healthy advances. China's Shanghai benchmark index rose 1 percent.
Asian markets plunged Monday and Tuesday on worries about a slowdown in the U.S., the world's biggest economy.
Markets rebounded after the U.S. Federal Reserve slashed interest rates by three-quarters of a point on Tuesday, a move that also restored some investor confidence on Wall Street.
For the week, Hong Kong's market — which tumbled a combined 13.7 percent Monday and Tuesday — dipped just 0.3 percent, while Tokyo's Nikkei fell 1.7 percent.
Investors were cheered by gains Thursday on Wall Street, where the Dow Jones industrials rose for a second day after the U.S. Labor Department said the number of people seeking unemployment benefits last week fell for a fourth straight week.
But traders continue to seek clues about chances for a U.S. recession.
A recovery in the dollar against the yen Friday helped lift Japanese exporters' stocks, with Toyota Motor Corp. jumping 6.3 percent, Honda Motor Co. rising 6.5 percent and Sony Corp. climbing 2.4 percent. The dollar was trading at 107.57 yen, up from 106.79 yen late Thursday in New York. A stronger dollar boosts exporters' overseas earnings when converted back to yen.
Japanese Economy Minister Hiroko Ota told a parliamentary committee Friday that the "direct impact of the U.S. subprime loan problem on Japan has been limited." But she added weak share prices could dampen consumer appetite.
Hong Kong property stocks like Sun Hun Kai Properties led the market on expectations that the Fed would again slash rates when it meets next Tuesday and Wednesday. Hong Kong banks usually match U.S. rate cuts as the Hong Kong dollar is pegged to the U.S. currency.
The Dow Jones industrial average rose 0.88 percent to 12,378.61 on Thursday, following a 2.5 percent surge on Wednesday.
Associated Press Writer Cassie Biggs in Hong Kong contributed to this report.