EUROPEAN EQUITIES rallied yesterday despite division and uncertainty surrounding treaty changes that euro area leaders hope will stabilise the single currency.
National benchmark indexes climbed in 15 out of 18 western European markets, after a majority of the EU’s leaders agreed a pact to work towards stricter budget discipline.
However, the EU deal, which was not backed by Britain, was short of any immediate, extra measures to ease the euro zone debt crisis.
One Dublin broker expressed surprise that markets had reacted so positively given the level of uncertainty that remained.
He believes investors are “seeing through the current scenario” and interpreting the latest developments as a signal that European leaders are committed to saving the euro.
DUBLIN
The Iseq index lagged most of its larger European peers yesterday, but closed in positive territory nonetheless, adding 0.75 per cent to close at 2,741.29.
Ryanair continued to hold up well yesterday, adding more than 2 per cent, or eight cent, to finish at €3.84 on decent volume. The airline has proved resilient of late, despite the difficult economic outlook for 2012.
CRH also traded on good volumes and rose seven cent to €13.50.
Cider manufacturer CC was one of the biggest losers on the day, slumping 4 per cent, or 12 cent, to €2.83.
Elsewhere, in the food and beverage sector, Kerry Group was in favour, rising about 1.5 per cent to €28.10.
LONDON
UK equities rose pretty much in line with Irish stocks, as investors took the positives from the agreements at the European summit.
Talk of potential Chinese investment in Europe and improving economic data in the US also lifted sentiment.
Banks and miners – sectors that have lost around a quarter of their value in 2011 – climbed higher, as London’s FTSE 100 added 45.44 points, or 0.8 per cent at 5,529.21, paring this week’s drop to 0.4 per cent.
Part state-owned Lloyds Banking Group and Royal Bank of Scotland added up to 6.5 per cent, while miners Kazakhmys and ENRC each rose around 2.9 per cent.
EUROPE
Italy led a tentative relief rally yesterday, as European markets recouped some of the losses recorded in the previous session. Banks, which have been a focus of the euro zone debt crisis due to their exposure to the region’s debt, were the best performers in Europe, with the STOXX Europe 600 Banks index up 2.6 per cent. Italian banks, among the worst hit on Thursday after the European Central Bank did not signal it would increase its bond-buying programme to struggling economies like Italy, were some of yesterday’s best performers. UniCredit and Intesa Sanpaolo, which have heavy exposure to Italian debt and have been affected by struggling growth in Italy, rose 7.1 per cent and 7.9 per cent respectively after falling 7.2 per cent and 8.9 per cent on Thursday.
The banks led the gains on Italy’s FTSE MIB, which rose 3.4 per cent to make it the best-performing index in Europe, after dropping 4.3 per cent in the previous session.
France’s CAC 40 rose 2.5 per cent and Germany’s DAX Index increased 1.9 per cent.
The pan-European FTSEurofirst 300 index of top shares closed up 1.3 per cent at 985.81 points, after falling 1.5 per cent in the previous session after ECB president Mario Draghi dampened hopes the central bank would increase bond purchases.
The Euro STOXX 50 volatility index, a key gauge of Europe’s investor “fear”, fell 11.4 per cent and hit a six-week closing low – the higher the volatility index, the lower investor appetite for risk.
US
US stocks rose, pushing the Standard and Poor’s 500 Index toward its second straight weekly gain, after European leaders agreed to boost a rescue fund and American consumer confidence topped estimates.
JPMorgan Chase added 3 per cent and Bank of America climbed more than 2.3 per cent, as banks rallied amid optimism on Europe.
General Electric jumped 3.8 per cent in midday trading after boosting its dividend for the fourth time since July 2010.
Caterpillar, the world’s largest construction and mining-equipment maker, and Halliburton both posted gains as investors bought shares of companies most tied to economic growth.
Consumer sentiment rose to its highest in six months in early December on signs of a better jobs market and an improving economy, a survey by Thomson Reuters/University of Michigan showed.
The S&P 500 rallied 1.69 per cent to 1,255.19 in late trade. The index has risen 0.7 per cent this week even after sliding 2.1 per cent on Thursday.
The Dow Jones Industrial Average added 186.56 points, or 1.55 per cent, to close at 12,184.26. – (Additional reporting: Bloomberg/ Reuters)
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