World stocks rise, brush off slower China growth

BANGKOK (AP) -- Global stock markets posted modest gains Monday, registering relief that a slowdown in China's economic growth wasn't as sharp as feared.

The world's second-largest economy grew 7.5 percent from a year earlier in the second quarter, slowing from the previous quarter's 7.7 percent, as weak trade and a clampdown on lending took their toll.

It was the second consecutive quarter of slower growth but still strong enough to suggest China can meet Beijing's 7.5 percent target for this year.

A clampdown on risky lending at state banks had contributed to jitters that China's growth might fall below 7 percent. That would hurt companies around the world that have become increasingly reliant on breakneck Chinese growth to boost earnings.

Nomura analysts Zhiwei Zhang and Wendy Chen said they were maintaining their 2013 growth forecast for China at 7.5 percent but trimmed their 2014 forecast to 6.9 percent from 7.5 percent.

"The government has made it clear to the public that it is less concerned about the growth rate and more about the quality and sustainability of growth," they said in a report.

To avoid a sharper slowdown, China's central bank is likely to lower the proportion of deposits that banks must keep in reserve by a total of 1.5 percentage points by the middle of next year, the Nomura analysts said.

In early European trading, France's CAC 40 was up 0.8 percent at 3,886.98 and Germany's DAX rose 0.6 percent to 8,261.49. Britain's FTSE 100 climbed 0.7 percent to 6,509.91. Wall Street was set for moderate gains with Dow and S&P 500 futures both up 0.2 percent.

Among Asian markets, Hong Kong's Hang Seng added 0.1 percent to 21,303.31 and Sydney's S&P/ASX 200 gained 0.1 percent to 4,981.10. South Korea's Kospi rose 0.3 percent 1,875.16.

Mainland China's Shanghai Composite Index advanced 1 percent to 2,059.39. Japan's financial markets were closed for a public holiday.

Elsewhere, benchmarks in Singapore, India, Taiwan and New Zealand rose while Indonesia fell.

The gains in Asia and Europe also came after Wall Street eked out new highs.

After spending most of Friday flat or down, U.S. stocks rallied at the last minute and closed slightly higher, just enough to post record highs for the Dow Jones industrial average and the Standard & Poor's 500.

In energy trading, benchmark crude for August delivery was down 33 cents at $105.62 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained $1.04 to $105.95 in New York on Friday, driven higher by continuing tensions in Egypt and a sharp drop in U.S. crude stockpiles.

The euro fell to $1.3030 from $1.3066 late Friday. The dollar rose to 99.85 yen from 99.14 yen.