European stocks rebound, euro above $1.24
- Published: 22/08/2012 at 12:48 AM
- Online news:
European stock markets rebounded on Tuesday and the euro jumped back above $1.24 as investors remained hopeful of central bank action over the eurozone crisis and cheered Spain's latest debt auctions.
A broker sits in front of screens showing the German market rates at the German stock exchange in Frankfurt in March. European stock markets rebounded and the euro jumped back above $1.24 as investors remained hopeful of central bank action over the eurozone crisis and cheered Spain's latest debt auctions.
London's benchmark FTSE 100 index of top companies closed with a gain of 0.57 percent at 5,857.52 points, while Frankfurt's DAX 30 rose 0.79 percent to 7,089.32 points and in Paris the CAC 40 won 0.94 percent to 3,513.28 points.
Milan rallied 2.40 percent to 15,331 points, and Madrid was 1.0 percent higher at 7,544.5 points.
In foreign exchange deals, the euro jumped to $1.2471 from $1.2342 late on Monday in New York.
"European financial markets are firmer today, with stocks, the euro and commodities all grounding higher while Spanish and Italian bond yields continue climbing off dangerous levels," said Ishaq Siddiqi, an analyst at ETX Capital.
"Today's gains are largely being driven by hopes that the ECB is moving closer to responding with a plan to arrest the spread of the regional debt crisis," he added.
European stock markets had lost ground on Monday after Germany and the European Central Bank (ECB) dampened rumours of powerful action to resolve the eurozone crisis.
But on sovereign debt markets the interest rate, or yield, on Spanish 10-year bonds fell to 6.211 percent from 6.443 percent on Tuesday, an indication that investors believe the ECB will likely step in at some point.
The rate dipped as low as 6.2070 percent in intraday trading.
In midday exchanges on New York stock markets, the Dow Jones Industrial Average was essentially flat at 13,267.61 points meanwhile.
The S&P 500-stock index had added 0.18 percent to 1,420.73 points, while the tech-rich Nasdaq was also unchanged at 3,076.45 points.
European stock markets were helped by news that Spain's short-term borrowing costs had tumbled as the closely-tracked eurozone nation raised 4.51 billion euros ($5.62 billion).
Spain raised the cash in a sale of 12- and 18-month bills, benefiting from lower interest rates since ECB chief Mario Draghi's said last month that the central bank might begin buying sovereign bonds again, if necessary and under certain conditions.
Compared with a similar sale on July 17, the 12-month rate slumped to 3.070 percent from 3.918 percent and the 18-month rate dropped to 3.335 percent from 4.242 percent, Bank of Spain figures showed.
ECB bond purchases have been contentious, with Germany voicing opposition in particular, but earlier this month Draghi outlined that such purchases remained an option for countries that were signed up to an EU rescue programme.
Without such aid, doubts over Spain's finances could emerge in October when it faces short-term debt repayments of 9.02 billion euros and long-term repayments of 24.158 billion euros, analysts at Spain's Bankinter said.
At CMC Markets, analyst Michael Hewson said that European markets "continue to move to the whims of rumour and counter rumour about which potential solutions to the European sovereign debt crisis might have a shelf life of more than 24 hours."
Asian stock markets closed mixed earlier in the day.
Tokyo's Nikkei index shrugged off the previous day's rally, slipping 0.16 percent as the dollar held on to recent gains against the yen, underlining a continued shift away from the safe haven Japanese currency.
Sydney rose by 0.44 percent, while Seoul closed 0.16 percent lower and Hong Kong was unchanged.
About the author
- Writer: AFP
Position: News agency