LONDON, Feb 4: Asian and European stock markets rose on Monday, supported by a pre-weekend rally for Wall Street on hopes that the US economy may avoid a recession after US interest rates were slashed.

Microsoft’s huge takeover bid for Yahoo at the end of last week galvanised buying interest in stocks that spread from New York to Asia and helped more than offset Friday’s unexpectedly weak US jobs data, dealers said.

They said that after recent heavy losses, investors were eager to pick up bargains.

Chinese share prices jumped 8.13 per cent on Monday, the biggest single-day gain in two and a half years, also supported by news that the domestic securities regulator had approved two new stock funds.

Elsewhere the gains were less spectacular but most markets still turned in a solid performance.

Tokyo ended up 2.69 per cent, Seoul rose 3.4 per cent and Hong Kong closed 3.8 per cent higher.

The rebound is very strong, with those who suffered most in the recent sell-offs leading the way, said Park Mun-Kwang, an analyst at Hyundai Securities in Seoul.

There was optimism that stocks may be able to extend the recovery.

The trend can continue for, say, a few more weeks, said Soichiro Monji, chief strategist at Daiwa SB Investments in Tokyo.

In early European trading, London inched up 0.05 percent after opening with a gain of 0.24 percent. Frankfurt gained 0.75 per cent and Paris was up 0.49 per cent nearly two hours after the open.

Investors were cheered by gains on Wall Street where US stocks rose Friday on news of a blockbuster 44.6-billion-dollar bid by Microsoft for Yahoo.

The move helped to offset worries about unexpectedly weak US employment figures. The US economy lost 17,000 jobs in January, the first drop in more than four years and contrary to forecasts for a gain of some 70,000.

Takeover activity also provided a lift for Sydney which ended up 0.4 per cent on Monday amid excitement about a potential takeover battle for Rio Tinto.

Aluminium Corp of China, or Chinalco, and US miner Alcoa Inc on Friday combined to buy a 12 per cent stake in the world’s third-largest miner. The move came after BHP Billiton made an unsolicited takeover bid for Rio Tinto which was rejected.

In Hong Kong, stocks were supported by speculation that China would avoid taking further measures to try to rein in economic growth in the wake of severe snowstorms that have hit the mainland.

Sentiment has improved a lot following gains overseas. China may refrain from tightening its monetary policy even further because of the snowstorm, said Alex Tang, research head at Core Pacific-Yamaichi.

On the foreign exchange market, the dollar edged higher against the yen as the Wall Street rally whet investors’ appetite for risk.

The Bank of England was expected to lower British borrowing costs by a quarter-point to 5.25 per cent on Thursday.—AFP