Shares gain over 2.5%, G20 leaders demand action to fix global economy: Economy roundup

The Australian sharemarket has opened higher today after leads from Wall Street led by positive factory data.   

Last night the Dow Jones Industrial Average gained 2.01% after new figures showed factory activity fell at a slower rate than the previous month – hardly brilliant news, but in this climate, even not-so-bad news is greeted happily.  

The Wall Street gains helped push Australia’s benchmark S&P/ASX200 index up 97.2 points or 2.7% to 3676.9 at 12.15 AESDT.

NAB shares have gained 3% to $20.92, while ANZ jumped 2.8% to $16.32. Commonwealth Bank shares have gained 2% to $32.75 while Westpac jumped 1.9% to $19.79.

The eyes of many investors are trained on the G20 meeting of global leaders in London, which were rocked by protests last night.

Prime Minister Kevin Rudd  is stressing the importance of coming up with a plan of action from the meeting, saying the global economy will suffer more damage than necessary if world leaders at the G20 summit walk away with no plans.  

He says there is an emerging consensus among the group of world leaders but that there could be demand for another G20 summit later this year.

“We have an obligation, as leaders, to produce the most substantive outcome possible from this G20 summit because working people across the world depend on this being a good outcome,” he said.

“All those working people are looking to us as leaders to do everything physically possible to support their interests both in the months ahead but also through until 2010.”

Elsewhere in London US President Barack Obama has played down any tensions caused by French President Sarkozy’s threats to walk out of the meeting.

Obama has said there has been an “enormous consensus” among the group.

“The core notion that government has to take some steps to deal with a contracting global marketplace and that we should be promoting growth – that’s not in dispute,” Obama said.

His comments come after Sarkozy threatened to leave the summit if his calls for global financial regulatory reform were not implemented and that he would not endure “false compromises”.

Back home, more job cuts have been announced in Queensland, where 300 workers at the Fisher & Paykel refrigerator factory will be made redundant as the company moves operations to Thailand.

The company will also close factories in the United States and New Zealand, as it moves its manufacturing arm to Thailand and Mexico.

Overseas, the Obama Administration in the US may push troubled automaker General Motors into a “controlled” bankruptcy, according to The New York Times.  

The publication has claimed that sources say the Government will persuade the automaker to implement a plan that will cut the company into two operations.

The rumours come as the company’s chief executive says it is receiving pressure from the Government about moving into bankruptcy.

“By no later than June 1, if we’re not able to accomplish this outside bankruptcy, we’ll be in bankruptcy. It’s pretty clear. The Government was unequivocal,” Fritz Henderson said.