×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

European stocks gain ahead of Wall Street rise

European stocks gain ahead of Wall Street rise
AP
Comment E-mail Print Share
First Published: Mon, Jul 19 2010. 04 59 PM IST
Updated: Mon, Jul 19 2010. 04 59 PM IST
London: European stock markets rose Monday as investors looked past a downgrade of Ireland’s public debt and instead bet on a rebound on Wall Street later after sharp losses last week.
Disappointing data in the US, including a plunge in consumer confidence and weak corporate results, suggested the world’s biggest economy may be in danger of falling back into recession. That caused massive losses on Wall Street on Friday, but hopes were for a mild rebound on Monday.
Britain’s FTSE 100 was up 0.5% at 5,185.81 and Germany’s DAX was up 0.5% at 6,068.53. France’s CAC-40 was 0.5% higher at 3,517.47.
The Dow, which had slumped 2.5% on Friday, was expected to rise on the open, futures were up 0.4% at 10,100. Standard & Poor’s futures were also 0.4% higher, at 1,067.70. Asian indexes mostly closed lower.
The increasingly troubled outlook for the US has begun to overshadow fears from Europe’s government debt woes, as markets seem to feel the debt crisis has eased ahead of the release of bank stress test results this week.
Second-quarter results from Citigroup Inc. and Bank of America Corp. disappointed investors because revenue fell even as the banks generated an increase in profits.
Traders also were shaken up as a volatile stock market, near-double-digit unemployment and a stalled housing market led to a drop in US consumer confidence in July, to its lowest point in nearly a year. That resulted in a chill on spending, which is bad news for the rest of the world, US consumer spending accounts for a fifth of the global economy.
“That really shows that people don’t have faith in the future. People are afraid of losing their jobs and are putting off buying things,” said Francis Lun, general manager of Fulbright Securities Ltd. in Hong Kong. “America is in danger of falling into recession. If the economy does not pick up, it will go the way of Europe.”
The recovery from Friday’s sharp losses came despite a one-notch downgrade by Moody’s of Ireland’s public debt. The ratings agency cited a weak growth outlook, high debt levels and large banking liabilities. In another reminder of Europe’s debt crisis, officials from the International Monetary Fund and the European Union said they had suspended talks of another loan for Hungary.
Yet investors mostly looked past the reports, bidding the euro up to $1.2954 from $1.2947 in New York late Friday, a sign that fears about the debt crisis have largely calmed.
Markets will this week be looking forward to the publication on Friday of EU-wide stress tests of banks, a simulation to see how the region’s 91 biggest lenders would fare if the economy worsened sharply.
“Although several European governments have suggested that the banks in their countries will pass the tests there is still a considerable event risk surrounding the announcement,” said Mitul Kotecha, analyst at Credit Agricole.
He said much will depend on how rigorous the tests are perceived to be.
In Asia, most indexes closed lower to make up for last week’s losses on Wall Street. Hong Kong’s Hang Seng index shed 159.21 points, or 0.8%, to close at 20,090.95. Australia’s S&P/ASX 200 lost 1.5% to 4,358.30. Seoul’s Kospi closed 0.4% down at 1,731.95.
Markets in Japan were closed for a national holiday.
The Shanghai benchmark, however, rose 2.1% to 2,475.42 on speculation that the Chinese government was committed to supporting the Agricultural Bank of China’s initial public offering to prevent it from dropping below its offer price.
Indexes in Thailand and India also showed small gains.
In currencies, the dollar rose to 87.13 yen from 86.56 yen.
Benchmark crude for August delivery was down 5 cents to $75.96 a barrel in electronic trading on the New York Mercantile Exchange.
Comment E-mail Print Share
First Published: Mon, Jul 19 2010. 04 59 PM IST
More Topics: Stocks | Shares | Markets | Europe | US |