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European stocks advance as dollar nears 100 yen


European stocks rose Monday with market focus on Asia, as the dollar spiked close to 100 yen after the G20 cautiously endorsed the Bank of Japan's huge stimulus measures, dealers said.

In afternoon deals, London's benchmark FTSE 100 index of top companies rose 0.27 percent to 6,303.59 points, as investors also shrugged off Friday's news that Fitch had axed Britain's triple-A credit rating.

Frankfurt's DAX 30 index gained 0.58 percent to 7,503.23 points and in Paris the CAC 40 won 0.38 percent to 3,664.85 points.

"With the G20 seemingly nodding its approval to Japan's aggressive monetary policy stance, Asian markets traded higher overnight, prompting buying in Europe," said analyst Matt Basi at trading firm CMC Markets UK.

The best performing European market was Italy's FTSE MIB index, which soared 1.95 percent to 16,068.10 points on investor relief after the surprise re-election of President Giorgio Napolitano over the weekend.

US stocks also opened slightly higher despite heavy industrial machinery giant Caterpillar posting sagging quarterly profit.

Five minutes into trade, the Dow Jones Industrial Average rose 0.19 percent, the broad-based S&P 500 added 0.29 percent, and the tech-rich Nasdaq Composite Index climbed 0.53 percent.

Caterpillar said net income came in at $880 million, down 45.4 percent from the year-ago period, citing a weakening outlook in its mining business.

In foreign exchange activity, the dollar spiked to 99.90 yen in Asian trading hours, reaching the highest level since April 11. It later stood at 99.60 yen in London deals, up from 99.52 yen late in New York on Friday.

The dollar has not breached the key 100-yen barrier since April 2009.

"Continued depreciation of the yen is still driving sentiment in equity markets across Asia, with statements in the G20 meeting being the latest driver to help propel dollar/yen back toward that 100 level," said GFT Markets analyst Fawad Razaqzada.

"The resulting sentiment is adding cheer in Europe."

Asian markets mostly climbed on Monday, with Tokyo surging in value on the back of the falling yen, which boosts exporters.

Tokyo jumped 1.89 percent, while Seoul was up 1.03 percent, Sydney rose 0.70 percent and Hong Kong added 0.14 percent.

Chinese stocks dipped 0.11 percent, however, as insurers suffered a sell-off after an earthquake struck Sichuan province, leaving more than 200 dead or missing and destroying villages.

The yen added to gains made in New York on Friday after the Group of 20 (G20) economic powers agreed that Japan's huge monetary easing measures unveiled this month were necessary to boost the country's stagnant economy.

In a statement following their meeting in Washington, G20 finance chiefs said the policy actions "are intended to stop deflation and support domestic demand."

Many countries, including the United States, have expressed concern that Japan could be deliberately trying to force the yen lower to boost exports and cut imports via "competitive devaluation."

But the G20, which includes the United States and Japan, called for more efforts to stimulate "strong, sustainable and balanced" growth globally, and took note of Japan's efforts towards that.

Elsewhere on Monday, the euro eased to $1.3026 from $1.3049 late on Friday. On the London Bullion Market, gold climbed to $1,425 an ounce from $1,405.50.

Late on Friday, after the market close, Fitch downgraded Britain's rating by one notch to 'AA+' and blamed the weaker economic and fiscal outlook. Rival agency Moody's had already removed the nation's triple-A assessment in February.

"Fitch's downgrade of UK debt late on Friday has largely been ignored, with the rating agency not really adding any insight beyond what we already know - austerity hurts," added analyst Basi.