World markets rise as oil prices hit new 2009 high

World stock markets shot up Wednesday as oil prices touched a new high for the year above $71 a barrel and fears of inflation eased in China.

Major indexes in Asia and Europe gained nearly 2 percent or more as buyers returned after two days of losing sessions, with strengthening commodity prices boosting resource producers like miner BHP Billiton and energy giant PetroChina.

After a three-month advance, global markets have showed a lack of direction in recent days amid worries that the rally was getting too far ahead of any real economic improvements.

But some investors found more reason for optimism after China reported prices fell in May for a fourth month, moderating the threat of inflation and possibly giving Beijing more room to carry out its giant stimulus plan.

The news also raised expectations other figures about Chinese industrial production and retail sales, due later this week, would be similarly upbeat _ raising hopes that Chinese demand could help lift other Asian economies.

Speculation that China's appetite for raw materials will stay robust have helped pulled commodity prices higher of late, a trajectory that continued Wednesday. Oil prices rose, with benchmark crude for July delivery up $1.41 at $71.42 a barrel.

While taken by some as a sign economic activity will pick up, the rise in oil and commodity prices is also being driven by worries about a weaker U.S. dollar and inflation, as well as massive liquidity, analysts said.

"There's an overriding hope that the commodity rally is signaling a recovery," said Kirby Daley, senior strategist at Newedge Group in Hong Kong. "But some of the fundamental decay at the core of the economy is still there, so I think investors may be getting ahead of themselves."

Hong Kong's Hang Seng surged 727.17, or 4 percent, to 18,785.66.

Japan's Nikkei 225 stock average gained 204.67 points, or 2.1 percent, to 9,991.49, as investors shrugged of news that core machinery orders, a closely watched indicator of corporate capital spending, tumbled to a 22-year low in April as uncertainty about an economic recovery kept companies cautious.

In South Korea, the Kospi advanced 3.1 percent to 1,414.88, Australia's benchmark climbed about 2.3 percent, while Shanghai's main index rose 1 percent. India's Sensex was up 2.5 percent in afternoon trading.

Europe followed Asian shares higher, with indexes in Britain, Germany and France up nearly 2 percent.

Wall Street futures gained, suggesting a stronger session in the U.S. Dow futures rose 86, or 1 percent, to 8,823 and S&P futures climbed 10.4, or 1.1 percent, to 949.90.

On Tuesday, the Dow Jones industrial average fell 1.43, or less than 0.1 percent, to 8,763.06. The broader S&P 500 index rose 3.29, or 0.4 percent, to 942.43.

The dollar rose to 97.58 yen from 97.46 yen while the euro climbed to $1.4120 from $1.4053 late Tuesday in New York.