London (AFP) - Stock markets gained ground on Monday, building on hopes that China's economy will bounce with the easing of Covid rules, and that slowing inflation will stay the Federal Reserve's hand on interest rate hikes.
Gains began in Asia as traders took heart from the forecast-busting report on US job growth last week, which also signalled a slowdown in wage growth.
A separate report showed an unexpected contraction in the US services sector -- the first since spring 2020, at the height of the Covid pandemic.
The readings, while suggesting the world's largest economy was showing signs of weakness, indicated that easing inflation would allow the Fed to slow the pace of interest rate increases.
"Increasing evidence that the US may be able to achieve a soft landing coupled with the already billowing tailwinds of China's long-awaited reopening are fuelling an insatiable appetite for risk-taking," said Stephen Innes, managing partner at SPI Asset Management.
Investors are betting the US central bank will lift borrowing costs about 25 basis points at its next meeting, and are looking to December consumer inflation data later this week for confirmation prices are rising more slowly.
Policymakers have warned that rates will rise until decades-high inflation is brought under control, with some saying cuts might not be likely until 2024.
The eurozone will meanwhile experience "very strong" growth in wages in the coming months as salaries catch up with galloping inflation, the European Central Bank predicted Monday.
Oil prices wavered after rebounding by nearly three percent Monday, as investors again worried about medium-term demand in China as Covid cases spike with the lifting of pandemic restrictions.
Signs that a mild winter is helping European economies weather the shock of gas export cuts from Russia amid the Ukraine war also bolstered sentiment, even though oil demand could ease as a result.
Key figures around 1650 GMT
London - FTSE 100: UP 0.3 percent at 7,724.94 points (close)
Frankfurt - DAX: UP 1.3 percent at 14,792.83 (close)
Paris - CAC 40: UP 0.7 percent at 6,907.36 (close)
EURO STOXX 50: UP 1.3 percent at 4,068.62
Hong Kong - Hang Seng Index: UP 1.9 percent at 21,388.34 (close)
Shanghai - Composite: UP 0.6 percent at 3,176.08 (close)
Tokyo - Nikkei 225: Closed for a holiday
New York - Dow: UP 0.7 percent at 33,873.96
Brent North Sea crude: DOWN 0.3 percent at $78.51 a barrel
West Texas Intermediate: UP 0.1 percent at $73.77 a barrel
Dollar/yen: DOWN at 131.60 yen from 132.13 yen on Friday
Euro/dollar: UP at $1.0758 from $1.0647
Pound/dollar: UP at $1.2203 from $1.2095
Euro/pound: FLAT at 88.15
