Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

GLOBAL MARKETS-Euro, sterling up on data; stress tests awaited

Cryptocurrency Jul 23, 2010 04:52AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

* Euro rises after record Ifo data for July

* Hit earlier by report some Spanish banks fail stress tests

* Robust U.S. quarterly earnings boost stocks

* Results of European bank stress tests due at 1600 GMT

* For more on the stress tests, click on

By Dominic Lau

LONDON, July 23 (Reuters) - The euro rose on Friday after a survey showed German business sentiment posted a record jump in July to its highest level in three years, and corporate results lifted stocks ahead of eagerly awaited European bank stress test results.

The single currency was lower before the Ifo survey, as Spanish newspaper El Pais reported that several of the country's 18 savings banks had failed the tests, which are due to be published on Friday afternoon.

The report from the Munich-based Ifo think tank helped ease concerns that the global economy could slip back into recession.

"We expected an increase but we didn't expect this. The German economy is running really strong at the moment," said Ralph Solveen at Commerzbank.

"Companies are not letting themselves be distracted by all the negative discussions going on, such as the bank stress tests, the debt crisis or the threat of a double-dip recession in the United States."

The euro gained 0.4 percent to $1.2944 and was up 0.6 percent at 112.74 yen, while sterling rose 1.2 percent to $1.5434 after the UK economy grew almost twice as fast as expected in the second quarter.

The dollar, meanwhile, slipped 0.3 percent against a basket of major currencies.

The results of the tests on 91 European banks, which use scenarios including declines in the value of the sovereign debt they hold, are due at 1600 GMT.

The European Union cleared Spain and Portugal to extend state support for their banks until the end of 2010, the latest move to help institutions weather the crisis.

"The market's assumption is that several of the Spanish Cajas (savings banks) will fail, along with some peripheral European banks. But if it goes beyond that the euro reaction will be negative," said Adam Cole, head of global fx strategy at RBC Capital Markets.

Meanwhile, Manfred Weber, the head of the Association of German Banks, told local radio that he was confident that German banks "all in all" would perform well in the tests.

Some analysts also consider Germany's quasi-public regional landesbanks to be at risk.

According to a survey of investors conducted by Goldman Sachs, 10 out of the 91 banks subjected to the tests were expected to fail.

The Goldman poll of 376 respondents, including hedge funds and long-only investors, showed European banks were on average expected to raise 37.6 billion euros ($48.4 billion) in extra capital following the tests, it said in a note dated July 22.

IFO, EARNINGS HELP

World stocks measured by the MSCI All-Country World Index advanced 0.5 percent, boosted by a 2.3 percent rise in Tokyo's Nikkei average following robust quarterly U.S. corporate results.

Microsoft Corp easily beat Wall Street forecasts with a 48 percent rise in quarterly profit.

Europe's FTSEurofirst 300 rose 0.2 percent, while European banks were down 0.3 percent.

"Corporate earnings have been good, or not as bad as expected, and that's helping the market up," said Andy Lynch, fund manager at Schroders. "Most banks will pass the stress test, but that's no great surprise."

Europe's banking sector carried a one-year forward price-to-earnings ratio of 9.09, compared with its 10-year average of 11.09, and a dividend yield of 2.72 percent versus a 10-year average of 3.34 percent, according to Thomson Reuters DataStream.

U.S stock index futures rose 0.2 to 0.4 percent, indicating a stronger start for Wall Street.

Bund futures fell 38 ticks to 128.31 and yields on 10-year benchmark German Bunds were up 4 basis points at 2.705 percent. (Additional reporting by Neal Armstrong, Ian Chua and Brian Gorman in London, and Dave Graham in Berlin; Editing by Hugh Lawson)

GLOBAL MARKETS-Euro, sterling up on data; stress tests awaited
 

Related Articles

Dollar Up, Investors Assessing the Risk of a Recession
Dollar Up, Investors Assessing the Risk of a Recession By Investing.com - Jun 29, 2022

By Zhang Mengying Investing.com – The dollar was up on Wednesday morning in Asia, with investors mulling the risk of a recession from major central banks’ interest rate hikes. The...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other 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, don’t trash it.

  •           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. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • 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.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email