Modest gains for European stocks
European stock markets posted modest gains, led by advances for commodity and banking stocks after there were signs of progress in the push for a political compromise on the looming “fiscal cliff” in the US economy.
President Barack Obama proposed a budget plan that would cut about $1.2 trillion in federal spending and raise a similar amount in taxes in the next decade, according to a person familiar with the talks.
Spanish government bonds also rose as the nation sold €3.52 billion of bills, meeting the maximum target of €3.5 billion that the treasury set for its last debt sale of the year.
Italian bonds also rallied, with yields moving back below levels seen before prime minister Mario Monti sparked a wave of selling last week after announcing he would resign early.
The Iseq enjoyed a relatively busy session as food group Glanbia placed 8.8 million ordinary shares, or 3 per cent of its issued share capital, at €7.60. The placing has been well-received by investors, with interest circling around the stock, and it closed up 6 per cent at €8.14.
Overall, the Iseq finished up 0.61 per cent, which was in line with the major European indices, with the market gleaning brisk trade in the morning before a pre-Christmas lull took hold after lunch.
Drinks group CC continued its run, closing at €4.53, up 2.5 per cent, after attracting decent trading volumes throughout the day. Cement-maker CRH closed flat at €14.32, as did Ryanair at €4.77. Aer Lingus, meanwhile, advanced 1.8 per cent to €1.08.
The FTSE 100 closed up 0.4 per cent but failed to hold above last week’s nine-month closing peak of 5,945.85, as analysts pondered its ability to nudge towards the next big level of 6,000. The mid-cap FTSE 250 index, however, hit a life-time closing high at 12,293.25 after registering a 0.6 per cent gain.
G4S gained 2.7 per cent, with traders citing the impact of a broker upgrade as well as a Financial Times report saying the security firm is set to win a role in implementing the British government’s contentious changes to welfare payments.
Fresh falls by market heavyweight Vodafone, down 1.1 per cent, was again the main drag on the blue chips, with the stock extending Monday’s 1.7 per cent decline and knocking nearly four points off the index on concerns about higher costs for mobile operators after the Dutch state raised much more than expected in its auction of fourth generation (4G) frequencies.
BHP Billiton, the world’s largest mining company, climbed 1.2 per cent to 2,150.5 pence after China’s leaders were said to set a target for the economy to grow 7.5 per cent next year.
National benchmark indexes gained in every western European market except Denmark and Greece. Germany’s Dax added 0.6 per cent, while France’s Cac 40 rose 0.3 per cent.
Banking shares contributed the most to the Stoxx 600’s advance. Santander, Spain’s largest lender, added 2.2 per cent to €5.96 and UBS, Switzerland’s biggest, increased 1.9 per cent to 15.25 Swiss francs. Banca Monte dei Paschi di Siena rallied 3 per cent to 22.3 cent.
Ratos plunged 5.1 per cent to 64.95 kronor, the biggest drop on the Stoxx 600, after the Swedish private-equity firm said it will cut its 2012 dividend.
Stocks in New York rose in the early hours of trading, extending an eight-week high for the Standard and Poor’s 500 Index, as investors watched for signs of a political breakthrough on budgetary matters.
An index of homebuilders gained 1.9 per cent as a report showed confidence among US homebuilders climbed in December to the highest level in more than six years.
Bank of America and Morgan Stanley rose more than 1.7 per cent to pace gains in financial shares.– (Additional reporting: Bloomberg / Reuters)