Markets brush off weak US consumer survey

Markets push higher despite soft US consumer survey; economy remains focus

Associated Press
Asia stocks up on strong US earnings
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A man takes a picture of an electric stock price display of a securities firm with a smartphone in Tokyo Tuesday, Jan. 29, 2013. Asian stock markets posted modest gains Tuesday as the feel-good factor lingered from near-record highs on Wall Street and signs of an upswing in U.S. manufacturing. (AP Photo/Koji Sasahara)

LONDON (AP) -- An unexpectedly-weak U.S. consumer confidence survey Tuesday failed to dent the positive tone in markets in the run-up to a series of key U.S. economic indicators.

Markets remained higher despite a soft reading from the Conference Board survey of consumer optimism. Its monthly index fell to 58.6 points, its lowest level since November 2011, amid concerns over U.S. politicians' ability to agree on a budget.

But many analysts brushed off the survey as a potential one-off, arguing the drop was due to an increase in the payroll tax agreed at the start of the year between the White House and Congress.

"Smaller paychecks are hurting consumer confidence but higher home and equity values, and eventually stronger job growth, should help buffer the pain," said Jennifer Lee, senior economist at BMO Capital Markets.

In Europe, the FTSE 100 index of leading British shares rose 0.7 percent to close at 6,339.19, while Germany's DAX gained 0.2 percent to 7,848.57. The CAC-40 in France rose 0.1 percent to 3,785.82.

In the U.S., the Dow Jones industrial average was up 0.4 percent at 13,938.61 while the broader S&P 500 index rose 0.3 percent to 1,504.82.

Markets are likely to be at the mercy of U.S. economic indicators for the rest of the week. Many stock indexes around the world have hit multi-year highs and the Dow Jones industrial average is not far off its all-time peak, achieved in 2007 just before the financial crisis started baring its teeth.

One of the reasons why markets have enjoyed such a strong start to the year is optimism over the U.S. economy. Over the coming days, investors will be inundated with a raft of figures, culminating on Friday with the monthly nonfarm payrolls report for January. The payrolls figures often provide the markets direction for a week or two after their release.

There's a lot to get through before Friday, though, most notably on Wednesday when the U.S. Federal Reserve concludes its latest two-day policy meeting. At their last meeting, there were signs that some rate-setters were poised to bring an end to the era of super-loose monetary policy.

"The Fed statement tomorrow is likely to be the most eagerly anticipated news of the week," said Rebecca O'Keeffe, head of investment at Interactive Investor.

Earlier in Asia, Japan's Nikkei 225 index rose 0.4 percent to 10,866.72 but Hong Kong's Hang Seng slipped less than 0.1 percent to 23,655.17.

Japanese banks surged on expectations they will beat earnings for the fiscal year 2012, the Nikkei newspaper reported. Mitsubishi UFJ Financial Group advanced 3.8 percent. Mizuho Financial Group gained 2.9 percent and Sumitomo Mitsui Financial Group rose 4.4 percent.

The positive tone was evident in other markets, too, with the euro 0.2 percent higher at $1.3478. In the oil markets, the price for a barrel of crude was $1.18 higher at $97.62 in New York.

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Pamela Sampson in Bangkok contributed to this report.

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