World markets build gains

World markets are ending the week on solid ground buoyed by the deal clinched by European leaders to contain the eurozone debt crisis.

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World markets are ending the week on solid ground Friday buoyed by the deal clinched by European leaders early Thursday morning to contain the eurozone debt crisis.

The benchmark Stoxx Europe 600 index rose by 0.59 per cent to 250.89 points in morning trading amid expectations Thursday's agreement signals that Europe might now be able to muddle through the two-year-old crisis gripping the 17-member currency bloc.

The increase brought the rise for the week in the index to 5 per cent as bank stocks continued to rally.

Investors had breathed a sigh of relief Thursday with shares racketing up after the Europeans pieced together an agreement to tackle the crisis.

The euro was hovering around 1.42 dollars Friday - its highest level in about two months - after gaining about 2 per cent on Thursday.

Investors across Asia also reacted positively to the news out of Europe with Japan's Nikkei index finishing the week up 1.39 per cent and Hong Kong's Hang Seng index closing up 1.68 per cent.

Underscoring the sense of optimism that has emerged among investors this week, shares in Hong Kong ended the week up 7 per cent and by 5.8 per cent in Shanghai.

This came after the relief rally spread across the Atlantic to Wall Street. New York's Dow Jones Industrial Average closed on Thursday up 2.86 per cent at 12,208.55 points.

As the trading day unfolded in Europe on Friday, the region's premier stock market in London was up 0.44 per cent.

Investors in Germany and France - the eurozone's two biggest economies -were more upbeat. While shares in Frankfurt jumped by more than 1 per cent, stocks in Paris gained 0.81 per cent helped along by a solid third-quarter report from French carmaker Renault.

Friday's gains followed rises on both the French and German bourses of about 6 per cent on Thursday.

Analysts said the more cautious mood prevailing on European markets on Friday also reflected concerns among investors that European officials still had to hammer out the key details surrounding Thursday's deal.

This includes the possible future role of the world's leading emerging economies, such as China and Brazil in backing the Europeans' efforts to deal with the crisis.

This could involve helping to finance cash-strapped eurozone states such as Italy and Spain. China has 3.2 trillion dollars in foreign reserves.

As evidence of the concerns about the deal, Milan's stock market bucked the uptrend in shares around the world by slumping about 0.5 per cent in morning trading Friday.

Rome faces a major battle to clean up its high debt levels, which also forms a major part of Europe's drive to stop the crisis from spreading to nations like Italy, which is the eurozone's third biggest economy.

In the meantime, it was the banking sector that once again helped to drive European stock markets on Friday.

The Stoxx 600 Europe banking index was trading up 1.72 per cent, having gained more than 11 per cent on the week. Moves to underpin the eurozone banking sector was a key part of the deal reached at the Brussels summit.

But underlying the scale of the fallout from the crisis for markets, the banking index is down about 23 per cent on the year. - Sapa-dpa

Source: http://www.iol.co.za/world-markets-build-gains-1.1167179

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