Robust US shopping cheers stocks

World stocks were boosted today by a robust start to the US holiday shopping season and reports that European leaders are considering legal means to force debt-ridden euro countries into fiscal discipline.

Benchmark oil rose above €99 per barrel and the dollar fell against the euro and the yen.

European stock markets rose in early trading. Britain’s FTSE 100 added 1.4% to 5,235.40, Germany’s DAX gained 2% to 5,601.80 and France’s CAC-40 jumped 2.1% to 2,917.54.

Wall Street also appeared to be heading for a higher opening, with Dow Jones industrial futures rising 1.6% to 11,370 and S&P 500 futures jumping 2% at 1,176.70.

The gains in Europe tracked those in Asia earlier in the day. Japan’s Nikkei 225 index jumped 1.6% to close at 8,287.49, South Korea’s Kospi gained 2.2% to 1,815.28 and Hong Kong’s Hang Seng rose 2% to 18,037.81. Australia’s S&P/ASX 200 added 1.9% to 4,058.20.

Benchmarks in Singapore, Taiwan and Thailand were also higher. Those in Indonesia and the Philippines fell. In mainland China, the benchmark Shanghai Composite Index gained 0.1% to 2,383.03.

German media reported over the weekend that German Chancellor Angela Merkel and French President Nicolas Sarkozy were studying legal changes – possibly amendments to the European Union growth and stability pact – to force nations using the euro common currency to comply with strict rules for budget discipline and tough sanctions for violators.

The reports raised hopes that the region may be able to stem a debt crisis that has infected peripheral countries like Greece and is threatening bigger countries like Spain.

Surprisingly strong Thanksgiving sales in the US also helped boost market sentiment, said Francis Lun, managing director of Lyncean Holdings in Hong Kong.

A record 226 million shoppers visited stores and websites during the four-day US holiday weekend starting on Thanksgiving Day, according to early estimates by The National Retail Federation.

The results for the first holiday shopping weekend show that retailers’ efforts to lure shoppers during the weak economy are working. Holiday shopping can account for 25% to 40% of a merchant’s annual revenue.

But what really got markets going, Mr Lun said, were Italian media reports that the International Monetary Fund was preparing up to €600bn in loans for cash-strapped Italy, whose massive debts are becoming unmanageable because of soaring borrowing costs.

“It’s a relief that we won’t see the demise of the euro just yet. The end of the world is delayed for another week,” he said.

“The problem facing Europe now is that a lot of these smaller countries do not play by the rules. So now one by one, they are falling like dominoes, becoming satellites of Germany, at least in the economic sense.”

But some analysts paid little heed to the report, saying the IMF simply could not afford such a loan.

“As of September the IMF had €385.5bn of forward commitment capacity, so even if they designated their whole fund to Italy it would be well below the amount that has been speculated,” Stan Shamu, of IG Markets in Melbourne, said in a report. “It would require huge increases in contributions from other nations.”

Fresh worries about Europe’s debt crisis flared on Friday after Italy had to pay 7.8% to borrow for two years at a debt auction, in another sign that investors are increasingly hesitant to lend to European countries. Greece, Ireland and Portugal had to seek bailouts from international lenders when their interest rates crossed the 7% mark.

Gains in Asia were broad-based. South Korea’s LG Electronics soared 8.6%, while Hynix Semiconductor added 7.1%. Hong Kong-listed Anhui Conch Cement gained 5.1% and China Railway Group was up 6.3%.

Japan’s top three car makers – Toyota, Honda and Nissan – all posted gains of at least 2.9%.

But Olympus, which is fighting to restore its reputation after a scandal involving the cover-up of huge investment losses, slid 10.6%. Australia’s Woodside Petroleum fell 2.3% after downgrading its 2012 oil and gas production targets.

Shanghai-listed Chongqing Three Gorges Water Conservancy gained 6.8%, while Sichuan Mingxing Electric Power Co rose 4.2% after a rumour that the authorities may raise electricity fees to combat higher coal costs.

During a shortened post-holiday trading session on Friday, the Dow fell 0.2% to close at 11,231.78.

The S&P 500 lost 0.3% to 1,158.67. The Nasdaq composite dropped 0.8% to close at 2,441.51.

Benchmark crude for January delivery was up 2.32 dollars to 99.12 dollars per barrel in electronic trading on the New York Mercantile Exchange. The contract rose €1.09 to finish at €98.01 per barrel on the Nymex on Friday.

In currency trading, the euro rose to 1.3332 dollars from 1.3230 dollars late on Friday in New York.

The dollar weakened to 77.66 yen from 77.76 yen.