World shares surge on optimism

After months of uncertain economic data and increasingly dire comments, the sun is suddenly shining again and the bulls are back.

Solid data from China and the US was bolstered today by a forecast from the European Commission that the euro-zone economy might expand as much as 1.7 per cent this year, up from an earlier forecast of 0.9 per cent.

Equities in the US and Europe surged to start the week. Less stringent new banking rules from Switzerland provided further fuel to the fire of optimism about the global economic recovery.

Among the optimists is billionaire investor Warren Buffett who today said businesses owned by his Berkshire Hathaway were expanding and he ruled out the prospect of a second recession in the US.

"I am a huge bull on this country," Buffett, Berkshire's chief executive officer, told the Montana Economic Development Summit on Monday. "We will not have a double-dip recession at all. I see our businesses coming back almost across the board."

In late trading, the Nasdaq Composite Index was up 1.47 per cent. The S&P 500 broke through its 200-day moving average for the first time since early August.

"At this point we're bumping up against some serious technical lines ... So you're either going to break out strong or you're going to fail again," Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey, told Reuters.

Among the most active on Wall Street were banks including JPMorgan Chase and Bank of America.

Besides stocks, commodities also received a boost from data showing that industrial production in China rose the most in three months, while retail sales and lending figures exceeded economists' estimates.

China's imports also improved, another clue that the nation's growth was accelerating after a second-quarter moderation.

On Sunday, the Basel Committee on Banking Supervision announced a compromise that more than doubles capital requirements for the world's banks but gives them as long as eight years to comply.

Bank shares also led the stocks gains across Europe. In the UK, Royal Bank of Scotland and Lloyds Banking Group rallied more than 2 per cent on the new rules.

"European banks are turning a corner," London-based Andrew Stimpson, an analyst at Keefe, Bruyette & Woods wrote in a report to clients, according to Bloomberg News.

"The generous timelines around capital and funding rules have removed some of investors' near-term fears. Most banks will reach the new requirements naturally."

The Stoxx Europe 600 Index gained 0.7 per cent to 266.45, its highest close since April 26.

In other corporate news, Intel and other chipmakers advanced as research firm Gartner forecast semiconductor equipment spending would double in 2010.

The US dollar was on track for its biggest one-day slide against the euro in two months.

The Dollar Index, which measures the greenback against a basket of six major currencies, dropped 1.18 per cent to 81.90.