We have updated our privacy policy and terms & conditions. Find out more here.
10
 

GLOBAL MARKETS-Stocks rise, euro steady after G20 urges action

By ReutersForexOct 17, 2011 06:21AM GMT Add a Comment
 
AA
+
-

* Nikkei, MSCI Asia Pacific ex-Japan up 1.5 pct

GLOBAL MARKETS-Stocks rise, euro steady after G20 urges action

* Euro STOXX 50 futures rise 1.1 pct, S&P futures up 0.4 pct

* U.S. stocks rose 1.7 pct on Friday on Europe, earnings

* Euro down slightly around $1.3845

* Brent crude steady around $112.29 a barrel

By Alex Richardson

SINGAPORE, Oct 17 (Reuters) - European stock index futures rose 1 percent and the euro held near a 1-month high on Monday after France and Germany said over the weekend they were making good progress on a plan to resolve the euro zone's debt crisis and recapitalise its banks.

Asian share markets also rose, helped by positive earnings and better-than-expected retail sales data from the United States that boosted hopes that corporate results are holding up inspite of a gloomy global outlook.

But a commodities rally ran out of steam, highlighting concerns across riskier asset classes that there is still much work to do to avoid a meltdown in Europe's financial system.

"It is too early to declare that sentiment has completely shifted," said Peter Esho, chief market analyst at City Index in Sydney. "The market is still fragile but there is a good case for arguing equities are cheap."

G20 finance ministers and central bankers said at a meeting in Paris that they expected euro zone leaders to "decisively address the current challenges through a comprehensive plan" at a European Union summit on Oct. 23.

French Finance Minister Francois Baroin, who chaired the meeting, said Berlin and Paris, the leading euro zone powers, were well on the way to agreeing on a plan to reduce Greece's debt, stop contagion and protect Europe's banks.

"The market is growing more expectant of more aggressive measures from Europe aimed at solving its debt crisis," said Kim Young-june, a market analyst at SK Securities.

Some market players are talking of a "binary" moment for the euro zone in which the leaders' summit either comes up with the goods to assuage concerns about the debt crisis or disappoints markets again.

The former might well be taken as a reason for a sustained rally in riskier assets such as equities and commodities. The latter would almost certainly spark a sell-off.

RISKIER ASSETS

For now, investors are looking at reasons to be hopeful.

Euro STOXX 50 index futures futures rose 1.1 percent. Futures for Germany's DAX and France's CAC-40 also rose around 1 percent, and financial spreadbetters called the FTSE 100 to make similar gains.

In Asia, Japan's Nikkei share average and MSCI's broadest index of Asia Pacific shares outside Japan both rose 1.5 percent.

The materials sector in the MSCI index gained more than 2 percent, boosted by a 2.4 jump in shares of mining giant Rio Tinto after it said it plans to sell 13 aluminium assets, trimming the business it expanded with the badly timed $39 billion acquisition of Alcan four years ago.

U.S. stocks rose on Friday, with the S&P 500 up 1.7 percent, on optimism about Europe and after strong earnings from Google Inc. , as Wall Street shares notched up their first back-to-back weekly gains since early July.

The CBOE Volatility Index , also known as the Vix or Wall Street's "fear gauge", fell 8 percent, an indicator that risk appetite was returning.

S&P futures advanced 0.4 percent in Asia on Monday.

EURO STEADY

The euro held firm after posting its biggest weekly gain in 9 months last week. The single currency traded around $1.3845 , down 0.1 percent on the day but well off a 9-month trough of $1.3144 set on Oct. 4.

"After the developments at the latest summit, we can assume that at long last concrete measures to solve the crisis will be implemented next weekend," said Sumino Kamei, senior currency analyst, Bank of Tokyo-Mitsubishi UFJ.

Such measures are broadly assumed to include a plan to make Greece's debts more manageable through bigger "haircuts" than have already been agreed for private bondholders and bolstering the firepower of the euro zone's rescue fund.

Much of the euro's gains, however, have been from short-covering -- when market players buy to realise a gain on an earlier bet against the currency -- and if EU leaders fall short of the "grand plan" that markets are now expecting the euro will quickly come under renewed pressure, traders warned.

Hopes of progress in Europe have also brought relief to Asian credit markets, with spreads on the iTraxx Asia ex-Japan investment grade index tightening further on Monday. The index has now tightened by a dramatic 26 basis points over the past week.

Growing risk appetite also reduced demand for safe-haven government bonds, with the benchmark Japanese government bond 10-year yield rising 0.5 basis point to 1.020 percent.

U.S. Treasury 10-year yields rose around 1.5 basis points to about 2.265 percent, after climbing 19 basis points last week, while the dollar firmed 0.1 percent against a basket of currencies .

Commodities markets were boosted last week by data suggesting that China, a key source of resources demand, is containing inflation and so more likely to avoid an economic "hard landing".

Copper eased 0.4 percent to $7,514 a tonne on Monday, after rising more than 3 percent in the previous session, and oil was steady, with Brent crude flat at $112.29 a barrel and U.S. crude up 0.3 percent at $87.09.

Gold, which in recent months has switched from a negative to a positive correlation with riskier assets such as industrial commodities and stocks as safe haven investors turned instead to the dollar, was little changed around $1,679 an ounce, after its biggest weekly gain since early September last week. (Additional reporting by Antoni Slodkowski in TOKYO, Jungyoun Park in SEOUL, Umesh Desai in HONG KONG and Victoria Thieberger in MELBOURNE; Editing by Kim Coghill)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data .

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Related Articles

Add a Comment

 

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

US SPX 500
 
 
 
Are you sure you want to delete this chart?
 
 
 
Are you sure you want to delete this chart?
 
 
 

Successfully Reported

Thank you. This comment has been flagged for a moderator.
_touchLoadingMsg