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World stock rise as China slowdown jitters ease

Youkyung Lee, AP Business Writer

A visitor stands near "Charging Bull" statue in Shanghai, China, Monday, July 22, 2013. Asian stocks mostly gained Monday after Japan's ruling party won a majority in parliament's upper house and a mandate to push ahead economic reforms. European markets fell. (AP Photo/Eugene Hoshiko)

SEOUL, South Korea (AP) -- World stock markets rose Tuesday as fears of a sharp economic slowdown in China eased.

Chinese media said Premier Li Keqiang had vowed growth wouldn't go below 7 percent, suggesting Beijing will take measures to support the world's second biggest economy after two straight quarters of deceleration.

Stocks rose across the board in Asia and European benchmarks also posted gains.

Li told Cabinet that China's economic growth needs to be kept above a minimum of 7 percent, according to Beijing News. The premier also reaffirmed 7.5 percent as this year's growth target.

The report cleared uncertainty about how much China's government would let the economy slow as it tries to shift the basis of growth toward domestic consumption and away from reliance on exports and industrial investment.

"Premier Li's latest talk contains important information and will surely clarify much confusion," analysts at Bank of America Merrill Lynch said in a report. "He could introduce a small scale fiscal expansion by tapping the central government coffer."

China's Shanghai Composite jumped 2 percent to 2,043.88 and Hong Kong's Hang Seng surged 2.3 percent to 21,915.42.

In Europe, France's CAC-40 added 0.2 percent to 3,948.11. Germany's DAX inched up 0.2 percent to 8,345.32 and Britain's FTSE 100 gained 0.1 percent to 6,626.77.

Futures augured slight gains on Wall Street. Dow futures advanced 0.1 percent to 15,513 and S&P 500 futures added 0.2 percent to 1,693.20.

Analysts said the previous day's downbeat news on the U.S. economy was double-edged for financial markets.

On one hand, the surprising drop in U.S. existing home sales in June to a seasonally adjusted annual rate of 5.08 million dampened optimism about the U.S. economic recovery. But investors could also interpret the weak data as ensuring continued bond-buying by the Federal Reserve.

Emerging market stocks have lost ground since Fed Chairman Ben Bernanke said the central bank will wind down its stimulus when the U.S. economy recovers. The remarks rattled financial markets in Asia, as it prompted foreign investors to pull out their funds from the emerging markets.

"As the U.S. economic data slows down, it could delay the talk on the so-called exit strategies, relieving investors who are worried about emerging markets," said Lim Dong-min, an economist at Kyobo Securities in Seoul.

Japan's Nikkei 225 rose 0.8 percent to 14,778.51, its second day of gains since Prime Minister's Shinzo Abe's ruling coalition gained control of the upper house in weekend elections. That could make it easier for Abe's administration to implement reforms aimed at lifting the world's No. 3 economy out of its long slump.

On Monday, Abe pledged that economic recovery will be the government's top priority.

Since Abe took office following a lower house election victory in late December, aggressive monetary easing and government spending have helped push stocks higher while business confidence has improved and the weaker yen has eased pressure on exporters.

South Korea's Kospi rose 1.3 percent to 1,904.15. South Korea's government said it will unveil a new set of measures to boost the stagnant real estate market including lower taxes on purchases of properties.

Australia's S&P/ASX 200 rose 0.3 percent to 5,017.10.

Investors are looking ahead to a week of corporate earnings reports. Apple Inc. will release its quarterly results after the U.S. market closes on Tuesday. In Seoul, Asian tech titan Samsung Electronics will announce its quarterly performance before trading starts on Friday.

In currency markets, the dollar rose to 99.47 yen from 99.32 yen. The euro rose to $1.3193 from $1.3186.

Benchmark crude for September delivery was down 67 cents to $106.25 a barrel in electronic trading on the New York Mercantile Exchange.