Wall Street opened higher Wednesday, following European stocks as investors shrugged off Slovakia’s rejection of Europe’s bailout fund and focused on hopes that a possible workaround solution would be found before a summit of the Continent’s leaders next week.
The advance has come even though Slovakia’s Parliament rejected a bill Tuesday night that would have strengthened the powers of the regional rescue fund, known as the European Financial Stability Fund, to help bail out strapped economies in the euro zone.
Despite the rejection, analysts said markets were confident that the measures would pass. Slovakia’s departing prime minister and her main opponent have said they would work to try to get the bill through Parliament soon.
“The Slovak rejection of the E.F.S.F. is not worrying the financial markets,” said Derek Halpenny, head of global currency research at Bank of Tokyo-Mitsubishi UFJ. Approval was expected ahead of a European Union summit meeting on Oct. 23, he said.
The 16 other countries in the euro area have already signed off on the bill, but the measure requires unanimous support.
There are ways around Slovakia’s opposition, but the move temporarily sets back efforts to address Europe’s debt jam, which has been the most important issue for financial markets for months.
The German chancellor, Angela Merkel, said Wednesday she remained optimistic that euro zone countries would pass an expanded European bailout fund.
That optimism was echoed in stock markets. On Wall Street, the Standard Poor’s 500-stock index was up 1.25 percent in early trading, while the Dow Jones industrial average was up 104 points, or almost 1 percent, and the Nasdaq composite rose 1.34 percent. In Europe, the CAC 40 in France was up 2.3 percent, the FTSE 100 index of leading British shares rose 0.6 percent while Germany’s DAX was almost 2 percent higher by late afternoon.
The euro has also advanced strongly on hopes that Slovakia’s “no” vote will soon be overturned. It was trading 1 percent higher at $1.3797.
Investors were also anticipating a Wednesday afternoon speech by the European Commission president, José Manuel Barroso, where he unveiled proposals on how to make European banks fit enough to sustain the worsening debt crisis.
Elsa Lignos, an analyst at RBC Capital Markets, said that while the commission has no power to make legislation, “it is worth hearing the Barroso proposals and the response they generate.”
Earlier in Asia, Japan’s Nikkei 225 index dropped 0.4 percent. But Hong Kong’s Hang Seng rose 1 percent and South Korea’s Kospi added 0.8 percent. Benchmarks in Singapore, India, Indonesia and mainland China also swung into positive territory.
Oil prices were relatively flat at $85.68 a barrel.
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