MADRID (MarketWatch) — European stock markets soared on Monday after media reports indicated that the region’s leaders were making progress in addressing the region’s debt crisis.
The Stoxx Europe 600 index XX:SXXP
+3.75% surged 3.8% to close at 229.84. The index
snapped a six-day losing streak on Friday with a gain of 0.7%, but still suffered a 4.6% fall last week, its worst weekly performance since late September.
Banks, which have been among the biggest decliners throughout the crisis given their exposure to indebted nations, were among the biggest gainers.
ING Groep NV NL:INGA
+11.20% surged 11.2%, BNP Paribas SA
FR:BNP
+10.33% jumped 10.3% and
Societe Generale SA FR:GLE
+9.60% rose 9.6%.The French CAC 40 index FR:PX1
+5.46%
rallied 5.5% Monday to 3,012.93, with financials as well as stocks tied to global economic growth contributing to gains. Shares of insurer AXA SA FR:CS
+13.11%
surged 13.1% and car makers Peugeot SA FR:UG
+7.54% and Renault SA
FR:RNO
+7.16% both rose over 7%.
Steelmaker ArcelorMittal SA FR:MT
+6.47%
gained 7.8%.
The German DAX 30 index DX:DAX
+4.60%
jumped 4.6% to 5,745.33, as Deutsche Bank AG DE:DBK
+8.12%
DB
+9.23%
gained 7.2% and auto group Daimler AG DE:DAI
+8.06% rose nearly 8%.
U.S. stocks were also sharply higher Monday by the close of European trading, buoyed by optimism about the resolution of the euro-area crisis and evidence of strong U.S. retail sales during the holiday weekend.
Traders digested several reports related to the euro-zone crisis.
Among them was a report in The Wall Street Journal that French and German officials are set to agree on a new stability pact to contain the crisis.
Separately, Reuters reported that officials have agreed on draft operational rules for the European Financial Stability Facility, the euro area’s bailout fund. Euro-area finance ministers will meet in Brussels on Tuesday.
“After having the Brandenburg Gate shaking last week with bond-issuance problems, [the German bond auctions last week] finally started bringing problems back to Berlin, which has started to force decisions to be made,” said Justin Urquhart Stewart, co-founder of Seven Investment Management. “All the comments are showing that at last we may be getting toward the next stage.”
A poorly received sale of 10-year German bunds last week shocked markets. Borrowing costs for Italy and Belgium rose Monday in separate auctions in what will be a busy week for European governments looking to sell debt.
Urquhart Stewart said he would still steer clear of banks, though big multinationals such as Siemens AG DE:SIE
+4.21%
SI
+5.11% are worth a closer look. Year-to-date, Siemens
shares are down 23%. They rose nearly 4% Monday.
“Equity markets are oversold enough to expect a decent rebound on any catalyst,” said Mike Lenhoff, chief strategist at Brewin Dolphin, in emailed commentary. He said markets got especially excited about a report, later denied by the International Monetary Fund, that a bailout was in the works for Italy.
“If Merkel can get her way on fiscal integration, equity markets could be easily supported by a swing out of bond markets,” said Lenhoff. “Indeed, if any of this week’s news is better than expected, especially those U.S. nonfarm payrolls, equity markets should enjoy a decent rebound, though at this stage it is unlikely to be much more.”
Meanwhile, Moody’s Investors Service warned Monday that “continued rapid escalation of the euro-area sovereign and banking-credit crisis is threatening the credit standing of all European sovereigns.”
And the Organization for Economic Co-Operation and Development said the euro-area sovereign debt crisis was the main risk to the global economy. Read more on OECD report
Italian bailout denied
Italy’s FTSE MIB index XX:FTSEMIB
+4.60% surged 4.6% to 14,578.23, with banking group
UniCredit SpA IT:UCG
+8.14% up 8.1%.
A spokesperson for the International Monetary Fund said there were “no discussions with the Italian authorities on a program for IMF financing.” Italian newspaper La Stampa had reported that the IMF was planning to offer up to €600 billion ($800 billion) in aid to Italy.
Belgian banks were also among the day’s biggest gainers. Shares of KBC Group NV BE:KBC
+13.78% surged nearly 14%, while Dexia SA
BE:DEXB
+15.09% jumped 15.1%.
Standard & Poor’s on Friday downgraded Belgium’s sovereign credit rating to double-A from double-A plus. But in the wake of that downgrade, the country moved to agree on a budget and allow the formation of a new government after a stalemate that has lasted a year and a half.
The U.K.’s FTSE 100 index UK:UKX
+2.87%
UK:UKX
+2.87% rose 2.9% to 5,312.76, with
banking group Barclays PLC UK:BARC
+7.84% up 7.8%.
Among miners, Antofagasta PLC UK:ANTO
+4.79% rose 4.8%, while Rio Tinto PLC
UK:RIO
+4.35%
RIO
+5.72% gained 4.4%.
Bucking the positive trend, shares of Randgold Resources Ltd. UK:RRS
-7.90%
GOLD
-6.01% sank 7.9% after the precious-metals miner warned that fourth-quarter
group production would take a hit from setbacks at its Tongon mine in Ivory Coast.
The Stoxx Europe 600 index XX:SXXP
+3.75% surged 3.8% to close at 229.84. The index
snapped a six-day losing streak on Friday with a gain of 0.7%, but still suffered a 4.6% fall last week, its worst weekly performance since late September.
Banks, which have been among the biggest decliners throughout the crisis given their exposure to indebted nations, were among the biggest gainers.
ING Groep NV NL:INGA
+11.20% surged 11.2%, BNP Paribas SA
FR:BNP
+10.33% jumped 10.3% and
Societe Generale SA FR:GLE
+9.60% rose 9.6%.The French CAC 40 index FR:PX1
+5.46%
rallied 5.5% Monday to 3,012.93, with financials as well as stocks tied to global economic growth contributing to gains. Shares of insurer AXA SA FR:CS
+13.11%
surged 13.1% and car makers Peugeot SA FR:UG
+7.54% and Renault SA
FR:RNO
+7.16% both rose over 7%.
Steelmaker ArcelorMittal SA FR:MT
+6.47%
gained 7.8%.
The German DAX 30 index DX:DAX
+4.60%
jumped 4.6% to 5,745.33, as Deutsche Bank AG DE:DBK
+8.12%
DB
+9.23%
gained 7.2% and auto group Daimler AG DE:DAI
+8.06% rose nearly 8%.
U.S. stocks were also sharply higher Monday by the close of European trading, buoyed by optimism about the resolution of the euro-area crisis and evidence of strong U.S. retail sales during the holiday weekend.
Traders digested several reports related to the euro-zone crisis.
Among them was a report in The Wall Street Journal that French and German officials are set to agree on a new stability pact to contain the crisis.
Separately, Reuters reported that officials have agreed on draft operational rules for the European Financial Stability Facility, the euro area’s bailout fund. Euro-area finance ministers will meet in Brussels on Tuesday.
“After having the Brandenburg Gate shaking last week with bond-issuance problems, [the German bond auctions last week] finally started bringing problems back to Berlin, which has started to force decisions to be made,” said Justin Urquhart Stewart, co-founder of Seven Investment Management. “All the comments are showing that at last we may be getting toward the next stage.”
A poorly received sale of 10-year German bunds last week shocked markets. Borrowing costs for Italy and Belgium rose Monday in separate auctions in what will be a busy week for European governments looking to sell debt.
Urquhart Stewart said he would still steer clear of banks, though big multinationals such as Siemens AG DE:SIE
+4.21%
SI
+5.11% are worth a closer look. Year-to-date, Siemens
shares are down 23%. They rose nearly 4% Monday.
“Equity markets are oversold enough to expect a decent rebound on any catalyst,” said Mike Lenhoff, chief strategist at Brewin Dolphin, in emailed commentary. He said markets got especially excited about a report, later denied by the International Monetary Fund, that a bailout was in the works for Italy.
“If Merkel can get her way on fiscal integration, equity markets could be easily supported by a swing out of bond markets,” said Lenhoff. “Indeed, if any of this week’s news is better than expected, especially those U.S. nonfarm payrolls, equity markets should enjoy a decent rebound, though at this stage it is unlikely to be much more.”
Meanwhile, Moody’s Investors Service warned Monday that “continued rapid escalation of the euro-area sovereign and banking-credit crisis is threatening the credit standing of all European sovereigns.”
And the Organization for Economic Co-Operation and Development said the euro-area sovereign debt crisis was the main risk to the global economy. Read more on OECD report
Italian bailout denied
Italy’s FTSE MIB index XX:FTSEMIB
+4.60% surged 4.6% to 14,578.23, with banking group
UniCredit SpA IT:UCG
+8.14% up 8.1%.
A spokesperson for the International Monetary Fund said there were “no discussions with the Italian authorities on a program for IMF financing.” Italian newspaper La Stampa had reported that the IMF was planning to offer up to €600 billion ($800 billion) in aid to Italy.
Belgian banks were also among the day’s biggest gainers. Shares of KBC Group NV BE:KBC
+13.78% surged nearly 14%, while Dexia SA
BE:DEXB
+15.09% jumped 15.1%.
Standard & Poor’s on Friday downgraded Belgium’s sovereign credit rating to double-A from double-A plus. But in the wake of that downgrade, the country moved to agree on a budget and allow the formation of a new government after a stalemate that has lasted a year and a half.
The U.K.’s FTSE 100 index UK:UKX
+2.87%
UK:UKX
+2.87% rose 2.9% to 5,312.76, with
banking group Barclays PLC UK:BARC
+7.84% up 7.8%.
Among miners, Antofagasta PLC UK:ANTO
+4.79% rose 4.8%, while Rio Tinto PLC
UK:RIO
+4.35%
RIO
+5.72% gained 4.4%.
Bucking the positive trend, shares of Randgold Resources Ltd. UK:RRS
-7.90%
GOLD
-6.01% sank 7.9% after the precious-metals miner warned that fourth-quarter
group production would take a hit from setbacks at its Tongon mine in Ivory Coast.
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