Swedish and global equities began the new decade in a brisk, optimistic spirit – saying goodbye to the old with relief.

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Global equities began the new decade in a brisk, optimistic spirit on Monday on prospects for recovery in contrast to near despair and deep uncertainty 12 months ago when shares crashed amid the worst downturn since the 1930s.

OMX Stockholm was up 1.24 percent on the year's first trading day while OMX Nordic 40, also including indexes from Copenhagen, Helsinki and Iceland, rose 2.57 percent.

In Sweden companies sensitive to market fluctuations, such as steelmaker SSAB, mining company Boliden, bank SEB and truck maker Volvo, led the rally.

Earning outlooks for 2010 are positive and stocks on the Stockholm exchange are expected to continue up after last year's rally of 45 percent.

"It still looks good and the conditions for rising stock market prices on the back of increasing profit prognosis has not changed", Martin Guri, equity strategist at Nordea, wrote in an update.

Esbjörn Lundevall, Head of Equity Research at SEB Private Banking, expects the Stockholm index to gain at least 10 percent this year.

"Economic growth has returned but interest rate levels are being kept low. That's a fantastic combination for equities", he told the Swedish Wire.

Swedish fund managers forecast a 13 percent increase, according to a survey by Nordnet last month.

Markets reopened for business after a holiday weekend spent celebrating, popping champagne corks and ushering in the New Year, and saying goodbye to the old with relief.

Financial markets were at risk of systemic breakdown for several months from the end of 2007 into the beginning of 2008, but by April so-called "green shoots" of recovery, driven by huge state stimulus programmes, were beginning to show.

Now, the big question is whether the momentum of recovery can be sustained as governments and central banks begin to wind down their costly, and eventually unsustainable, spending and rescue programmes, and the provision of "cheap" money.

A significant pointer to the answer will come with the trend in the first few days of trading, notably on Wall Street where the financial crisis of 2007 erupted.

On Monday, the British, French and German stock markets rose in early afternoon deals, extending a rally from April-May in which they all gained more than 22 percent, amid increasing signs that the global downturn was over.

London's FTSE 100 index of leading shares added 0.73 percent, the Paris CAC 40 index leapt 1.10 percent and Frankfurt's DAX 30 index won 0.65 percent.

Across in Asia on Monday, Tokyo struck 15-month high, buoyed by government plans to expand a credit line to troubled Japan Airlines. However, Hong Kong drifted lower in muted trading.

"The FTSE 100 started the year on the front foot, led by the heavyweight banks and energy firms," said analyst Nicola Poskitt at spread-betting firm City Index.

"We have seen investors coming in this morning in positive moods and firmly looking for equity markets to continue their moves higher after last year saw the FTSE rally 22 percent.

"The sentiment is still on the recovery theme and considering the fact that historically the first trading day of the year usually ends with gains, this rally is no surprise."

All three main European markets, which had closed early last week for the New Year holiday weekend, each gained more than a fifth last year amid growing investor confidence over economic recovery.

London and Paris each gained more than 22 percent in 2009, while Frankfurt won almost 24 percent last year.

"Today sees the markets on the up," added Capital Spreads analyst Simon Denham.

"This is not exactly surprising as the first day of virtually every year seems to be positive as funds look to place at least a bit of their cash pot."

The energy sector was lifted as oil prices soared beyond 81 dollars per barrel on expectations of higher heating fuel demand amid a freezing cold winter in the northern hemisphere.

Meanwhile, in Asia on Monday, Japan's benchmark Nikkei-225 index jumped 1.03 percent to 10,654.79 points -- which was the best finish for the Tokyo Stock Exchange since early October 2008.

Japan Airlines (JAL) shares soared by more than 30 percent after the government on Sunday agreed to double a state-funded loan to the cash-strapped carrier to 200 billion yen (2.2 billion dollars).

New York stocks had slumped at the close of a turbulent year on Thursday, after positive jobs data sparked concerns that interest rates may rise sooner than anticipated.

But shares settled only slightly below their 52-week highs with strong gains for the year.

Wall Street reopens later on Monday for its first trading session of 2010, with the market dogged by concerns on the timing of any interest rate increase by the Federal Reserve amid economy recovery.

In early 2009, markets had slumped on fears about governments' abilities to beat the worst economic downturn since the 1930s.

But they were boosted as leading central banks and governments launched radical measures to boost lending, stabilise struggling banks and cut interest rates to historically low levels.

"Overall, many of the factors that have driven equity markets higher in 2009 remain in place -- loose monetary policy, low yields on cash, attractive valuations and cash on the sidelines waiting to be invested," said analysts at brokerage Killik & Co.

"Against this background, we believe UK equities will continue to move higher in 2010," they added in a note published on Monday.

"However, we expect another year of uncertainty, with little visibility over a number of issues such as the outcome of the general election, the timing of an increase in interest rates and the direction of the dollar."

The eurozone, Japan and the United States all pulled out of recession in 2009 -- but Britain has yet to escape from the downturn which was rooted in the global financial crisis.