USA TODAY - Stocks rebounded Friday after two days of losses sparked by fears the Federal Reserve would abandon its easy monetary policy sooner than many expected.
All major U.S. stock indexes were higher Friday, and a solid German economic survey shored up trading through the European session.
"The Ifo index now looks consistent with annual German GDP growth of around 2%," said Jennifer McKeown, a senior European economist at Capital Economics.
A recovering Germany will go a long way to supporting economic growth across Europe, not least in the economy of the 17 European Union countries that use the euro.
In Europe, the FTSE 100 index of leading British shares was up 0.7% at 6,338 while Germany's DAX rose 0.9% to 7,651. The CAC-40 in France was 1.6% higher at 3,682.
The pick-up comes after a sizeable sell-off, which started in the second half of Wall Street's trading session Wednesday following the release of the minutes to the last policy meeting of the Fed.
The minutes showed some policymakers worried about the cost of the bank's monetary stimulus, which triggered speculation that the asset purchases it has been conducting would end sooner than anticipated. The purchases, commonly known as quantitative easing, are designed to boost the U.S. economy, partly by increasing liquidity in financial markets and by keeping a lid on interest rates in the bond markets.
Those concerns remain about future U.S. monetary policy remains. And others have the potential to bring an end to the prevailing optimism that has marked 2013 out so far in the markets.
This weekend's Italian elections could stoke renewed worries over Europe's' debt crisis especially if there is a protracted period before a government is formed. Fears over the U.S. budget are also never far from the surface.
"Whether this renewed support can actually stick in what is shaping up to be a rather quiet session remains to be seen," said Fawad Razaqzada, market strategist at GFT Markets.
Earlier, the Asian heavyweight, Tokyo's Nikkei 225 index, recovered to gain 0.7% to 11,385.94. The region's biggest economy, China's benchmark Shanghai Composite Index fell 0.5% to 2,314.15. Elsewhere, Seoul's Kospi gained 0.2% to 2,018.89 while Hong Kong's Hang Seng shed 0.5% to 22,782.44.
In other financial markets, trading was fairly light.
In currency markets, the euro was down 0.1% at $1.3179 while the dollar fell the same rate to 93.20 yen. In the oil markets, benchmark crude for April delivery was up 16 cents at $93 a barrel in electronic trading on the New York Mercantile Exchange.
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