A mixed report on American bank profits did not erase investor enthusiasm Tuesday, as stocks rose around the world on strong economic data from China and Germany.
Citigroup reported an 11 percent drop in fourth-quarter earnings, well below the Wall Street consensus, and revenue fell 7 percent, underscoring the banking industry’s slump in investment banking and slow growth in lending. Wells Fargo profit rose 20 percent in the same period.
Earlier, China said its economy, which has been an engine of growth since the financial crisis arrived in 2008, grew at an annual rate of 8.9 percent in the last three months of 2011, down from the 9.1 percent in the third quarter of 2011, but better than many economists had expected.
The Standard Poor’s 500-stock index rose 0.9 percent in afternoon trading in New York. The Dow Jones industrial average gained 1 percent and the Nasdaq composite index added 1.1 percent. Markets were closed Monday for the Martin Luther King holiday.
Across the Atlantic, the Euro Stoxx 50, an index of euro zone blue chips, rose 1.5 percent. The FTSE 100 in London added 0.7 percent.
In Mannheim, the Center for European Economic Research, known by its German initials Z.E.W., reported that its economic sentiment index increased by 32.2 points in January from last month, reaching a level of minus 21.6 points, its highest point since last July.
“Contrary to repeatedly expressed fears of a recession, the assessment of the financial market experts gives reason for cautious optimism that Germany will only experience a dent in economic activity,” the Z.E.W. president, Wolfgang Franz, said in a statement. He also noted that the European Central Bank’s massive supply of funding to the banking sector last month could have contributed to the uptick.
A successful debt sale in Spain also helped European stocks to rally for a second day.
In its first test of the market’s appetite for debt since it was downgraded by S.P. on Friday, Spain on Tuesday sold €4.9 billion, or $6.2 billion, in Treasury bills. It sold 12-month bills priced to yield 2.05 percent, down from 4.05 percent at the previous auction of such securities, in December, and 18-month bills at 2.35 percent, down from 4.23 percent.
The market’s new enthusiasm for riskier assets was reflected in European sovereign bond yields. French 10-year bonds rose in price, despite the Standard Poor’s downgrade Friday that clipped the country’s rating by one notch from the top AAA spot. The yield, which moves in the opposite direction of the price, fell 4 basis points to 2.98 percent.
Italian 10-years fell 14 basis points in yield, to 6.45 percent, while Spain’s 10-years yielded 5.03 percent, down 9 basis points. A basis point is equal to one-hundredth of a percent.
Analysts caution against reading too much into yields and auction results, however, as the European Central Bank has been intermittently intervening in the secondary market since August to help Spain and Italy. And they note that the fear factor in the interbank market remains at extremely elevated levels: European banks deposited a record €501.9 billion overnight Monday at the E.C.B., the central bank said Tuesday.
U.S. crude oil futures rose 2.0 percent to $100.64 a barrel. Comex gold futures rose 1.9 percent to $1,662.40 an ounce.
The dollar was mixed against other major currencies. The euro rose to $1.2788 from $1.2667 late Monday, while the British pound rose to $1.5385 from $1.5325. The dollar fell to 76.60 yen from 76.78 yen, and to 0.9459 Swiss francs from 0.9542 francs.
Asian shares posted solid gains. The Tokyo benchmark Nikkei 225 stock average added 1.1 percent. The Sydney market index S.P./ASX 200 rose 1.7 percent. In Hong Kong, the Hang Seng index added 3.2 percent and in Shanghai the composite index rose 4.2 percent.
Article source: http://feeds.nytimes.com/click.phdo?i=021b6dccdc47593b65badd6eb577e8d7
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