Stocks march on recovery path

Stocks in Asia and Europe pushed higher on Friday, extending a recovery from a panic attack over the prospect of a steeper rise in US interest rates. Asian stock markets climbed in thin holiday trade, led by gains in Tokyo, which passed the baton over to European markets. London was 0.8 percent higher in late morning trading, despite a disappointing increase of just 0.1 percent in retail sales last month, after a revised 1.4 percent fall in December. However, London stocks were buoyed by the strong pound, which increases profits for FTSE-100 listed stocks which conduct most of their sales outside of Britain. France's CAC 40 and the DAX 30 in Frankfurt both climbed 1.0 percent higher. The gains followed US indices closing higher for the fifth straight session on Thursday, with the S&P 500 and Dow Jones Industrial Average both gaining 1.2 percent. This week's rebound follows a sharp drop that sent major indices down more than 10 percent -- considered correction territory. "After two successive weeks of sizeable losses for equity markets, there was always the possibility that we'd see a bit of a rebound this week, and so it has proved, though once again the extent of the rebound has been led by US markets, while markets in Europe have lagged behind somewhat," said Michael Hewson, market analyst at CMC Markets UK. "The reason for the change in sentiment may well be down to the fact that the overall global economic picture continues to remain fairly positive," he added. - Schock fades - The shock of the possiblity the US Federal Reserve may need to hike interest rates faster than it previously indicated to ward off a possible surge in inflation driven by rising wages may also be wearing off. "The impressive recovery in equities, particularly US equities, whilst bond yields pace higher, shows that the market is learning to live with the prospect of higher inflation and a potentially more aggressive Federal Reserve," said analysts at London Capital Group. Trading was generally subdued in Asia as many markets, including in China, Hong Kong and South Korea, were closed for the Chinese New Year break. Tokyo's benchmark Nikkei 225 index gained 1.19 percent, tracking Thursday gains on Wall Steet. "Risk-averse attitude will be receding gradually with a sense of bottoming out in US shares," Okasan Online Securities said. The dollar continued to come under pressure, slinking to a 15-month low against the yen. The euro rose as high as $1.2555, its highest level against the greenback since mid-December 2014. Oil markets also firmed, driven by greater risk appetite and a weaker dollar, which has been a "significant component driving market sentiment", according to Stephen Innes, an analyst at OANDA. - Key figures around 1020 GMT - London - FTSE 100: UP 0.8 percent at 7,291.16 points Frankfurt - DAX 30: UP 1.0 percent at 12,470.38 Paris - CAC 40: UP 1.0 percent at 5,271.94 EURO STOXX 50: UP 1.1 percent at 3,425.61 New York - DOW: UP 1.2 percent at 25,200.37 (close) Tokyo - Nikkei 225: UP 1.2 percent at 21,720.25 (close) Hong Kong - Hang Seng: Closed for a public holiday Shanghai - Composite: Closed for a public holiday Euro/dollar: UP at $1.2519 from $1.2464 Pound/dollar: UP at $1.4094 from $1.4012 Dollar/yen: DOWN at 106.07 yen from 106.14 yen Oil - West Texas Intermediate: UP 31 cents at $61.65 per barrel Oil - Brent North Sea: UP 29 cents at $64.62 per barrel burs-rl/spm