European and U.S. markets bounced back from early-session losses Monday as the restructuring plan from U.S. automaker General Motors Corp. got the thumbs up and pharmaceutical stocks were lifted by expectations that health authorities will increase stockpiles of anti-viral drugs to deal with a possible swine flu pandemic.
The FTSE 100 index of leading British shares closed up 11.02 points, or 0.3 percent, at 4,167.01 while Germany's DAX rose 19.75 points, or 0.4 percent, to 4,694.07. The CAC-40 in France didn't manage to claw back all its earlier losses and ended just 0.42 point lower at 3,102.43.
Meanwhile in the U.S., the Dow Jones industrial average was 35.52 points, or 0.4 percent, higher at 8,111.81 while the broader Standard & Poor's 500 index rose 1.28 point, or 0.2 percent, to 867.51.
The markets had started the week badly as investors worried that a deadly outbreak of swine flu in Mexico could go global and derail any global economic recovery -- that its possible spread could set back already-enfeebled global trade and travel, just at a time when policy makers have begun sounding more optimistic about the global economy's prospects.
Nevertheless, as the day went on the mood became calmer and some investors, mindful of previous scares, held out hope the outbreak would not turn into a disastrous pandemic.
"After weathering the likes of SARS and bird flu in recent years, there seems to be an element of wait-and-see amongst traders," said Anthony Grech, market strategist at IG Index.
The turnaround in the markets emerged when General Motors said it will cut 21,000 U.S. factory jobs by next year, phase out its storied Pontiac brand and ask the U.S. government to take company stock in exchange for half GM's government debt. GM's restructuring announcement -- seen as life or death for the company as it attempts to get more help from the U.S. government -- was greeted positively in the markets, with the stock rising by over a quarter.
"General Motors has gone down well as it's gone somewhat further than hoped and I think it deserves every inch of the support it is getting," said Howard Wheeldon, senior strategist at BGC Partners.
GM may have garnered some plaudits but the main topic of interest in the markets Monday was the apparent spreading of swine flu around the world. Though airlines and travel companies took the brunt of the selling pressure, pharmaceutical companies enjoyed solid gains amid expectations that demand for anti-viral drugs would rise.
In Europe, Switzerland's Roche Holding AG -- the maker of Tamiflu -- saw its share price rise around 4 percent while GlaxoSmithkline PLC, which manufactures the Relenza drug, spiked 6 percent.
"The share prices of major European pharmaceutical companies have jumped in a generally weak market in anticipation of increased orders for vaccine-related products and it is estimated that the average earnings uplift from such an event could amount to around 0.5 percent in both 2009 and 2010," said Jeremy Batstone-Carr, director of private client research at stockbrokers Charles Stanley in London.
The gains weren't just confined to Europe though. In the U.S., a whole host of drug companies like Merck & Co., Pfizer Inc. and Eli Lilly & Co. were in demand too.
Travel stocks suffered though amid worries that passengers could hold back from flying for fear of catching the virus and authorities around the world were preparing to issue advice to passengers.
In the U.S., American Airlines owner AMR Corp. dropped 9 percent while United Airlines' parent company UAL Corp. slid 11 percent. In Europe, Deutsche Lufthansa AG fell 9 percent, while British Airways PLC was down 8 percent. Earlier, Australia's Qantas Airways fell 4 percent while Hong Kong-based Cathay Pacific Airways slid 8 percent.
Holiday and hotel companies were also sold off, with British cruise line firm Carnival PLC down 7 percent and German travel company TUI AG 3 percent lower as it revealed that it was suspending all trips to Mexico City as a precaution.
Earlier, most of Asia's markets were hit by the pandemic fears, with Hong Kong -- one of the main focal points of the SARS virus concerns just six years ago -- closing down 418.43 points, or 2.7 percent, to 14,840.42. Japan's Nikkei 225 stock average managed a gain of 18.35, or 0.2 percent, to close at 8,726.34 in back-and-forth trade.
Elsewhere in Asia, Australia's stock measure gained 0.5 percent while Shanghai's fell 1.8 percent. Markets in Singapore, Taiwan and India retreated.
Oil prices bounced off lows in line with the improved sentiment in the markets. Benchmark crude for June delivery fell $1.46 to $50.09. The contract jumped $1.93 to settle at $51.55 last week.
In currencies, the dollar weakened to 96.60 yen from 97.17 yen. The euro traded lower at $1.3147 from $1.3161.
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