Britain and Europe
The London FTSE, Paris CAC and Frankfurt DAX continue to zoom along, finally rallying above year-end levels. Since mid-February, the indexes have jumped 4.1, 7.7 and 10.8 percent, respectively. Fueling the increases has been a combination of favorable economic indicators for the United States, mixed with improved sentiment in Britain and Europe and a wide leveling off of manufacturing declines. The weakest link, however, remains Germany, which remains in recession. Contributing to last week's rally was the recommendation by two major brokerages to diversify portfolios to include more European and Japanese shares.

Asia
The Nikkei 225 had its best weekly gain since November 1997. It is up 12.7 percent since December 31, 2001. The index has outperformed most of the indexes followed here with the exception of the South Korean Kospi, up 19 percent, and Mexican Bolsa, up 13 percent. However, the increase has not come without help. The government has taken measures to boost stocks, such as trying to curb trades that profit when share prices decline (short selling) before the fiscal year ends. In addition, both Merrill Lynch and Credit Suisse First Boston told investors to increase their holdings of Japanese shares, a recommendation that boosted stocks and the yen. Foreign investors bought a net 114 billion yen ($880 million) in Japanese shares last week, the biggest amount in seven weeks, according to Tokyo Stock Exchange figures.

The Japanese government imposed trading restrictions as it forces banks to value their stockholdings and other assets at market prices, rather than purchase prices, at the end of this fiscal year. The government is trying to push up stocks out of concern that the marking down of equity assets, after years of decline, may bankrupt some banks. Suspicions are high that the government has asked state-run pension funds to purchase shares of companies in the Nikkei 225. The government says it hasn't. Even Credit Suisse's recommendation to increase Japanese stock holdings comes with a caveat: Sell them back in two months.

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