European stock markets rose modestly Tuesday following a mixed Asian session as investors picked up beaten-down stocks but remained acutely aware that the rally could run out of steam in the run-up to this Thursday's G-20 summit of world leaders.
Germany's DAX was up 49.87 points, or 1.3 percent, at 4,039.10 while the CAC-40 in France rose 40.90 points, or 1.5 percent, at 2,760.24.
The FTSE 100 index of leading British shares outperformed its counterparts in Europe after retailer Marks & Spencer PLC surged over 11 percent following a better than expected sales update. Even though the company said its like-for-like sales, which exclude new stores and space, fell 4.2 percent in the 13 weeks to March 28, the markets were braced for an even bigger decline of 7.5 percent.
M&S's spike higher helped the FTSE climb 93.87 points, or 2.5 percent, to 3,856.78.
"I think it's generally felt that equity markets in Europe and the U.S. were probably oversold yesterday and consequently in Europe we have seen quite a nice bounce, particularly in London," said David Buik, senior strategist at BGC Partners.
Wall Street futures also pointed to a modest recovery later after the Dow Jones industrial average and the broader Standard & Poor's 500 index fell more than 3 percent on Monday. Dow futures were up 58 points, or 0.8 percent, at 7,538 while the S&P futures rose 6 points, or 0.8 percent, to 790.30.
World markets tumbled Monday amid more downbeat news from the global banking sector, renewed fears about the fate of the U.S. auto industry and mounting pessimism surrounding this week's Group of 20 meeting.
While the leaders from leading rich and developing countries will look to present a show of unity, especially on the need to regulate global capitalism better, earlier hopes that they will agree a coordinated fiscal boost appear to have been dashed by skepticism in many European governments.
The summit could even exacerbate tensions between the U.S., the European Union and China over economic and fiscal policies. Czech Prime Minister Mirek Topolanek, who is also EU President, highlighted those faultlines last week when he painted President Barack Obama's plan to spend nearly $2 trillion to push the U.S. economy out of
recession as "the road to hell."
"It remains to be seen how markets will cope with the disappointment that we believe may be a principal product of this week's meeting of the G-20," said Neil Mellor, an analyst at Bank of New York Mellon.
Tuesday's gains in Europe came despite a fairly downbeat assessment of the world economy from the Organization for Economic Cooperation and Development. It said the United States is likely to contract by 4 percent in 2009, while the 16-nation euro-zone will likely shrink by 4.1 percent and Japan by 6.6 percent. Earlier, the Asian Development Bank slashed its 2009 growth forecast for the region's developing economies due to plunging exports.
After the G-20, the markets will also have the closely-watched U.S. jobs report for March to contend with. The non-farm payrolls data often set the tone in equity markets for the month ahead.
Earlier in Asia, Japan's Nikkei 225 stock average reversed early gains to fall 1.5 points, or 1.5 percent, to 8,109.53, amid mounting expectations that Japan's Prime Minister Taro Aso will unveil new stimulus measures during this week's summit, on top of about 12 trillion yen ($122 billion) in public spending announced last year.
Meanwhile Hong Kong's Hang Seng was up 119.69, or 0.9 percent, to 13,576.02 after diving nearly 5 percent on Monday.
In South Korea, where a central bank survey showed manufacturers were becoming less pessimistic, the Kospi was up 0.7 percent. Mainland China's Shanghai index gained 0.6 percent, Australia's index was down 0.6 percent, while Singapore's index rose 1.7 percent. Markets in New Zealand and the Philippines fell.
In oil markets, prices edged up Tuesday but remained below $50 a barrel. Benchmark crude for May delivery rose 83 cents to $49.24 in European electronic trading on the New York Mercantile Exchange. The contract fell more than 7.6 percent, or $3.97, to settle at $48.41 on Monday.
In currencies, the dollar rose to 98.27 yen from 97.34 late Monday in New York, while the euro rose to $1.3306 from $1.3185.
