European stocks surge after Wall Street hits records

LONDON (AFP) - European main stock markets opened the week higher and the euro advanced against the dollar on Monday as dealers took their cue from a record early session on Wall Street.

London witnessed some huge gains and losses for individual shares, with Aberdeen Asset Management soaring and energy group Petrofac slumping.

At close, London's benchmark FTSE 100 index climbed 0.45 per cent to 6,723.46 points.

Frankfurt's DAX 30 added 0.62 per cent to set a new record high close of 9,225.43 points, and the CAC 40 in Paris rose 0.66 per cent to 4,320.68 points.

European shares added on to earlier gains when Wall Street's Dow and S&P 500 blasted to new intraday records on Monday fuelled by a wave of new Boeing plane orders and continued positive investor sentiment for stocks.

In midday trade, the Dow Jones Industrial Average was up 0.25 per cent at 15,961.70, but earlier it crossed the 16,000 milestone for the first time.

The broad-based S&P 500 made its first foray above 1,800, though later stood just under that at 1,799.08 points, a 0.05 per cent gain from Friday.

"The global markets remain very much risk-on after Janet Yellen signalled she wants to play it safe by continuing with the current loose monetary policy," said Capital Spreads dealer Jonathan Sudaria.

Ms Janet Yellen told senators reviewing her nomination as Federal Reserve chief that US growth was still too fragile and unemployment too high to begin cutting the bond-buying scheme, which has provided much-needed support to the economy.

In foreign exchange, the European single currency rose to US$1.3522 from US$1.3493 late in New York on Friday.

The euro climbed also to 83.92 pence against the British pound, which was slightly lower at US$1.6112.

The dollar fell to 100.04 yen from 100.12 yen on Friday.

On the London Bullion Market, the price of gold slid to US$1,283.50 an ounce from US$1,287.25 on Friday.

"Fed chair-elect Janet Yellen's dovish tone at last week's testimony before the Senate Banking Committee is still weighing modestly upon the US dollar in the near-term," said Mr Lee Hardman, currency analyst at the Bank of Tokyo-Mitsubishi.

Ms Yellen has given no hint of when she would wind down the US$85 billion-a-month scheme, saying - like current chairman Ben Bernanke - everything was data-driven and that the latest data suggested the economy still required Fed support.

Her comments have meanwhile come as some relief to emerging economies, which have been in turmoil in recent months owing to uncertainty about the future of the stimulus, which has been credited with a global investment splurge.

Shares in Aberdeen Asset Management rocketed 14.74 per cent to 489.7 pence after the British firm said it had agreed to buy an asset management business belonging to state-rescued Lloyds Banking Group.

The deal is for Lloyds' Scottish Widows Investment Partnership Group up to £660 million (S$1.11 billion).

On the downside, shares in energy services provider Petrofac slumped 16.61 per cent to 1,200.00 pence after the group said that it expected new income in 2014 to see "flat to modest growth year-on-year".

In Paris, shares in European aerospace group EADS, which controls Airbus, rose by 2.43 per cent to 53.21 euros on strong orders at the Dubai air show.

Shares in carmaker PSA Peugeot Citroen surged 6.30 percent to 10.89 euros on reports the company was looking to divest its stake in parts company Faurecia which jumped 3.75 per cent to 23.67 euros.

Shares in television channel TF1 fell by 2.94 per cent because the French football team lost a key match at the weekend and is at risk of not qualifying for the 2014 World Cup competition for which the channel has bought broadcasting rights.

Traders were also cheered after China on Friday released a blueprint for restructuring the world's number two economy that pledged to open up the financial sector and relax restrictions on investment.