GLOBAL MARKETS: European Stocks To Open Up On Global Optimism

LONDON -- European shares are expected to open higher Monday, as investors show confidence about a global recovery following upbeat Japanese gross domestic product data.

The third quarter Japanese GDP release showed the fastest rate of growth since the first quarter of 2007, said Gareth Berry at UBS, and 'our economists note that the risk of Japan slipping into a double-dip recession early next year has receded significantly."

Consequently, Ben Potter, market analyst at IG Markets, expected London's FTSE 100 index to open 22 points higher at 5318, Frankfurt's DAX 23 points higher at 5710, and the CAC-40 index in Paris 10 points higher at 3816.

As far as the European economic calendar is concerned, euro-zone harmonized CPI is due at 1000 GMT. However, U.S. retail sales for October, at 1330 GMT, are likely to take center stage, with the market expecting a strong uptick, said Potter.

"Failure to deliver here is going to heap pressure on Wall Street, and although the Standard & Poor's break above 1100 is increasingly being portrayed as having the potential to determine that this is no bear market rally, anything that suggests consumer confidence is taking a hit as we approach the holiday shopping season could initiate a wave of profit taking in the U.S. - the impact of which would doubtless be felt on markets across the globe," said Potter.

On Wall Street Friday, stocks climbed amid some better-than-expected earnings reports, with Walt Disney propelling the higher and retailer J.C. Penney getting a boost from investors.

The gains in the stock market came despite reports showing a decline in U.S. consumer sentiment in November and a widening of the trade deficit in September.

The rose 73 points, or 0.7%, to 10270,47, up 2.5% for the week. The Nasdaq added 18.86, or 0.89%, 2167.88, up 2.6% for the week. And the Standard & Poor's 500 index rose 6.24, or 0.6%, to 1093.48, up 2.3% for the week.

A strong session in the U.S. supported Asian shares, which traded mostly higher Monday with gold stocks leading in Sydney as the precious metal hit another record high, but chatter about potential capital raisings in Tokyo limited gains in that market.

Japan's Nikkei 225 closed just 0.2% higher, but China's Shanghai Composite Index advanced 2.7% and Australia's S&P/ASX 200 index closed 1.0% higher. Hong Kong's Hang Seng Index was last seen 1.8% higher.

In the currency markets, the euro gained ground against the dollar, as traders bought high-risk currencies amid gretaer confidence about the recovery of the world's economy.

At 0725 GMT, the euro stood at $1.4986, around half a U.S. cent higher compared with late Friday in New York, while sterling stood at $1.6738, from around $1.6714. The dollar was at Y89.56, from Y89.65.

The December front-month Nymex crude contract was $1.03 higher at $77.38 a barrel, after slipping 59 cents Friday in New York, supported by a weaker dollar against the euro and stronger Asian stocks. Spot gold was trading at $1,131.45 a Troy ounce, up around $11 from the New York close, a fresh record high.

Elsewhere, the December bund futures contract opened marginally higher, up just 0.08 at 121.40.