Global stocks gain ground as inflation panic cools

NEW YORK (AFP) – World stock markets pushed higher Thursday as investors continued to regain confidence after worries about inflation led to brutal selling earlier in the month.

US indices closed higher for the fifth straight session, with the S&P 500 gaining 1.2 percent as Wall Street continued to reverse a six-day stretch that sent major indices down more than 10 percent, which is considered correction territory.

''The correction has seemed to end quickly,'' said Alan Skrainka, chief investment officer at Cornerstone Wealth Management.

Gains were more muted in Europe, although Paris mustered a 1.1 percent advance after strong Airbus earnings sent the aerospace giant up 8.5 percent.

In Asia, Hong Kong ended two percent higher as traders headed into the Chinese New Year break. The index has risen 5.6 percent over the past three days, helping it bite into last week's drop of more than nine percent.

Tokyo finished 1.5 percent higher, despite a surge in the yen against the dollar, which tends to hurt exporters.

The global pullback early this month was ignited after the January US jobs report showed strong wage gains, which raised worries the Fed- eral Reserve would accelerate interest rate hikes in response to increased inflation.

But the market appears to have pivoted and dismissed this worry, at least for now.

The US Producer Price Index rose 0.4 percent in January, matching analyst expectations, according to the Labor Department report released prior to the New York market open.

Patrick O'Hare of Briefing.com said inflation fears subsided after spooking investors at the start of the month.

''There was an acceptance of the idea that a pickup in inflation is a reflection of a growing economy, which is good for earnings growth,'' he wrote.

However, O'Hare cautioned that inflation fears are not dead, just ''in a hibernation stage.''

Some analysts expect another wave of volatility before long.