Stocks eke out further gains as optimism prevails

After early softness, stocks gain further ground as investor optimism remains

Associated Press
Asia stocks up as US small business mood improves
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An investor keeps a memo as he sits in front of the stock price monitor at a private securities company in Shanghai, China, Tuesday, May 14, 2013. Asian stock markets were mixed Tuesday in a lukewarm reaction to data showing that U.S. consumers revved up their retail spending last month. (AP Photo/Eugene Hoshiko)

LONDON (AP) -- Stocks pushed ahead Tuesday as the recent optimism that's driven many stock indexes up to historic highs remained despite an escalating view that the U.S. Federal Reserve will start to wind down its asset purchases sooner than expected.

Over the past few weeks, stock investors, in particular, have been picked up by a wave of optimism over a range of issues — including the prospects for the U.S. economy following a run of forecast-busting jobs figures.

Waning fears over Europe's debt crisis and the bold attempt by Japan's monetary authorities to shake off a two-decade economic stagnation have also lain behind the positive mood that's prevailed through 2013 — and particularly in May.

Though those drivers of optimism remain, as evidenced by Tuesday's further stock market gains, investors appear wary of pushing stocks much higher given talk that the U.S. Federal Reserve may soon start to rein in its monetary stimulus.

"We do seem to be creeping closer to the tipping point," said Fawad Razaqzada, market strategist at GFT Markets.

In Europe, Germany's DAX rose 0.6 percent to 8,325 while the CAC-40 in France was 0.3 percent higher at 3,956. The FTSE 100 index of leading British shares was up 0.6 percent at 6,671.

Figures showing industrial production among the 17 European Union countries that use the euro rose a better-than-expected 1 percent in March helped shore up the mood. The figures raised some expectations that the recession in the eurozone may have ended. The first estimate of the region's gross domestic product in the first three months is due for release Wednesday.

In the U.S., the Dow Jones industrial average was up 0.2 percent at 15,128 while the broader S&P 500 index rose 0.4 percent to 1,641.

Earlier in Asia, Japan's Nikkei 225 index fell 0.2 percent to close at 14,758.42 — a modest retreat following two spectacular sessions that have seen the index rise to five-year highs.

The index has soared more than 42 percent since the beginning of the year as the yen dropped sharply in response to the Bank of Japan's aggressive monetary stimulus program.

Prime Minister Shinzo Abe, elected late last year on promises to revive the world's third-largest economy, has implemented a policy mix of increased public spending and aggressive monetary easing to end the country's two decades of economic stagnation.

On Tuesday, the dollar was steady at 101.75 yen, and largely unchanged against the euro, which was trading 0.1 percent lower at $1.2973.

Elsewhere in Asia, South Korea's Kospi added 1 percent to 1,968.83 while Hong Kong's Hang Seng shed 0.3 percent at 22,930.28. In mainland China, the Shanghai Composite Index fell 1.1 percent to 2,217.01. The Shenzhen Composite Index fell 1.4 percent 960.81.

Oil prices were little changed, with the benchmark New York rate 29 cents lower at $94.88 a barrel after the International Energy Agency raised its U.S. oil production forecasts and cut its prediction for global crude demand.

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