World stocks, euro rise on Europe summit proposals

Associated Press
An investor looks at the stock price monitor at a private securities company Friday June 29, 2012 in Shanghai, China.  Asian stock markets and the euro rose sharply Friday after European leaders hammered out a strategy aimed at stanching an escalating financial crisis among the 17 countries that use the euro. (AP Photo)
.

View gallery

BANGKOK (AP) — World stock markets and the euro rose sharply Friday after European leaders hammered out a strategy aimed at stanching an escalating financial crisis among the 17 countries that use the euro.

Leaders who gathered in Brussels made unexpected progress on the second and final day of a summit convened to map out a plan to turn around the continent's economy. Investors had expected the summit — like so many meetings before it — would not produce a solution powerful enough to restore the confidence of markets.

Analysts said the proposals from the summit represented credible steps in the region's efforts to contain a debt and financial crisis. European Union leaders agreed early Friday to use the continent's bailout fund to funnel money directly to struggling Spanish banks, a step that avoids increasing Spain's overall sovereign debt burden. They also agreed to the idea of a tighter fiscal union in the longer term.

"Although the EU summit is still stuck on major issues including joint debt, euro bonds ... the EU has laid out a long term plan in principle that can solve the problem if they can get all the leaders agreed on the details," said Jackson Wong, vice president at Tanrich Securities in Hong Kong.

"We don't expect a magical formula that can solve the problem right out from the EU summit. However, if we can see the stances from all the leaders, especially from Germany — that they are heading in the right direction — I think going forward, it should be OK."

European stock markets bolted higher in early trading. Britain's FTSE 100 rose 1.5 percent to 5,576.67. Germany's DAX surged 2.6 percent to 6,310.43 and France's CAC-40 jumped 2.7 percent to 3,134.65.

Wall Street also appeared headed for gains. Dow Jones industrial futures added 1.1 percent to 12,663 while S&P 500 futures rose 1.4 percent to 1,340.30.

Benchmarks in Japan, South Korea and Australia all reversed early falls to move higher.

Japan's Nikkei 225 index rose 1.5 percent to close at 9,006.78, its highest finish since May 10. South Korea's Kospi gained 1.9 percent to 1,854.01 and Australia's S&P/ASX 200 added 1.2 percent to 4,094.60.

Hong Kong's Hang Seng advanced 2.2 percent to 19,441.46. The euro jumped to $1.2571 from $1.2429 late Thursday in New York.

Banking shares benefited from the news of help for their European counterparts. Japan's Nomura Holdings bolted 3.9 percent up and Hong Kong-listed Agricultural Bank of China rose 3.4 percent. South Korea's Shinhan Financial Group Co. gained 4.2 percent.

Traders brushed off dour news from the U.S. The Commerce Department said the American economy expanded at a 1.9 percent annual rate in the first quarter, a weak pace that isn't expected to pick up.

Growth of around 1.9 percent typically generates roughly 90,000 jobs a month. That's considered too weak to lower the unemployment rate, which was 8.2 percent last month.

On the job front, applications for unemployment benefits stayed above a level last week that is generally considered too high to lower the jobless rate.

Benchmark oil for August delivery was up $2.13 to $79.80 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.52 to close at $77.69 in New York on Thursday.

In currencies, the dollar rose to 79.61 yen from 79.45 yen late Thursday in New York.

View Comments (0)