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May 30, 2017

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China, Japan stimulus hopes boost global stocks

SEOUL/HONG KONG -- Global stocks were mostly higher Monday on expectations China and Japan will take new steps to spur economic growth.

Most European stock markets gained ground in early trading with Britain's FTSE 100 up 0.2 percent to 6,631.59. Germany's DAX index was nearly flat at 9,585.65 and France's CAC 40 was also almost unchanged at 4,409.91. On Wall Street, stocks were set to extend gains from Friday. Dow and S&P 500 futures were both up 0.3 percent.

Asian markets mostly rose Monday following a rally on Wall Street as attention turns to the release of key data from Japan and the United States later in the week.

Tokyo jumped 0.90 percent, or 131.80 points, to 14,827.83, Sydney climbed 0.52 percent, or 27.9 points, to 5,394.8 and Seoul added 0.23 percent, or 4.61 points, to 1,985.61.

Hong Kong rose 0.39 percent, or 85.53 points, to finish at 22,151.06, but Shanghai slipped 0.41 percent, or 8.41 points, to 2,033.31.

Investors were unmoved by news that North and South Korea had traded live artillery fire across their disputed maritime border Monday, forcing South Korean islanders to take shelter. The exchange came a day after the North drove up tensions by threatening a new nuclear test.

Lee Sun-yub, an analyst at Shinhan Investment Corp., said the exchange of fire had little impact on foreign investors in South Korea while some local institutional investors used the incident to take profit.

Investors in Japan anticipated the government or the central bank would announce measures to offset the impact of a sales tax hike. Japan's sales tax will increase to 8 percent from 5 percent on Tuesday, a move needed to help stabilize government finances but also a possible setback to economic recovery.

Harumi Taguchi, principal economist at IHS Global Insight, said an unexpectedly weak industrial output report also added pressure for the Bank of Japan to pursue additional monetary easing.

Japan's industrial production for February fell 2 percent from the previous month due to heavy snowfall and slowing demand for construction-related products, Taguchi said in a report.

Investors also increasingly expect that China's government will take measures to prevent a slowdown in the world's No. 2 economy.

An official manufacturing survey due Tuesday might cement those views after another survey released last week show China's manufacturing at an eight month low.

Regional investors took their lead from a positive finish to the week in the United States and Europe.

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