Germany and France have been discussing a deal to fast-track European budget and financial coordination, hoping that a deal that avoids the need for renegotiating European Union treaties could reassure markets and bring skeptics at the European Central Bank on board to support the beleaguered euro.
Investors were awaiting a meeting later Monday in Washington of President Obama and European Union officials, where discussions of the financial crisis were expected to figure prominently. Rumors of preparations for an International Monetary Fund bailout of Italy — even though quickly denied by the fund — also contributed to a sense that official efforts to stabilize the euro were progressing.
Alessandro Frigerio, a fund manager at R.M.J. Sgr in Milan, said he had been “almost certain” that the market would rally before Dec. 9, when European leaders hold a summit meeting to discuss the sovereign debt crisis.
“The market had been selling off for weeks on all the talk and rumors,” he said. “Now, we’re going to start getting some facts,” including more detail on the European Financial Stability Facility, the primary euro-zone bailout vehicle, and Italy’s plans to pay down its debt.
“I don’t know how the market will react after it gets the facts, though,” he said. “We’ll see when we get them.”
Investors shrugged off dire warnings from the Organization for Economic Cooperation and Development and from Moody’s Investors Service, both of which warned that the euro-zone problems were well on their way to becoming serious issues for non-euro countries.
They also ignored another dismal debt offering in Italy, where the Treasury paid 7.20 percent to sell 12-year bonds, 2.7 percentage points above what it paid at a similar auction in October.
In afternoon trading, the Euro Stoxx 50 index, a barometer of euro zone blue chips, rose 4.2 percent, while the FTSE 100 index in London gained 2.3 percent.
Standard Poor’s 500 index futures rallied, suggesting a strong start later on Wall Street. The S.P. 500 fell 0.3 percent on Friday.
Earlier in Asia, the Hang Seng index in Hong Kong rose 2 percent, while the composite index in Shanghai added 0.1 percent. The S.P./ASX 200 in Australia closed 1.9 percent higher, while in Tokyo, the Nikkei 225 stock average rose 1.6 percent, finishing the day at 8,287.49 points, despite comments from the central bank governor, Masaaki Shirakawa, that the prospects for the Japanese economy remained poor.
Global stock markets have slumped in recent weeks, as the European debt crisis began to move from small, peripheral economies like Greece and undermined confidence in larger euro zone members, like Italy and even France.
In a dire report issued Monday, the O.E.C.D. said that “the euro-area crisis remains the key risk to the world economy.”
If concerns about the euro are not addressed, “contagion to countries thought to have relatively solid public finances could massively escalate economic disruption,” the report said. “Pressures on bank funding and balance sheets increase the risk of a credit crunch.”
That followed a similar warning from Moody’s about the increasing severity of the European debt crisis.
“While the euro area as a whole possesses tremendous economic and financial strength, institutional weaknesses continue to hinder the resolution of the crisis and weigh on ratings,” Moody’s said in a report
on Monday. “In terms of the policy framework, the euro area is approaching a junction, leading either to closer integration or greater fragmentation.”
Still, markets were helped by news of unexpectedly strong consumer spending over the Thanksgiving holiday weekend — a key shopping period for American retailers.
The National Retail Federation said Sunday that spending per shopper surged 9.1 percent over last year — the biggest increase since 2006 — to an average of almost $400 a customer. In all, 6.6 percent more shoppers visited stores on the Thanksgiving weekend than last year.
Article source: http://feeds.nytimes.com/click.phdo?i=1afb88d99f98d8acc9d785fda0194df9
Speak Your Mind
You must be logged in to post a comment.