News from AAP

US, Europeans stocks rise on hopes of EU agreement

Print This Post A A A

A roundup of trading on major world markets:

NEW YORK – A deal to forge stronger ties between most of Europe’s economies sent stocks sharply higher Friday as hopes grew that the region is close to resolving its debt crisis. The Dow Jones industrial average rose 186 points.

The Dow and S&P 500 both had their second straight week of gains. Financial stocks rose the most over the week as worries eased about Europe. The yield on the 10-year Treasury note rose back above 2 per cent as investors shed low-risk investments.

All 17 nations that use the euro agreed to sign a treaty that allows a central European authority closer oversight of their budgets. Nine other EU nations are considering it. Britain is the lone holdout.

The agreement came after marathon overnight talks among European leaders at a two-day summit in Brussels. A deal on tighter fiscal control is considered a crucial step before the European Central Bank will consider committing more money to lower borrowing costs of heavily indebted countries like Italy and Spain by buying their bonds.

The Dow closed up 186.56 points, or 1.6 per cent, at 12,184.26. It’s up 1.4 per cent for the week.

Bank stocks led the market higher, reflecting traders’ optimism about Europe’s progress toward solving its crisis. Citigroup Inc. rose 3.7 per cent, Morgan Stanley 3.1 per cent and JPMorgan Chase & Co. 3 per cent.

Banks have been weighed down for months by fears about their exposure to Europe. The biggest European banks have been downgraded. If Europe’s crisis spins out of control, US banks that do business with them would also suffer because of the closely intertwined relationships between global lenders and financial markets.

The Standard & Poor’s 500 index closed up 20.84 points, or 1.7 per cent, at 1,255.19. The Nasdaq composite index finished up 50.47, or 1.9 per cent, at 2,646.85. The S&P is up 0.9 per cent for the week, the Nasdaq 0.8 per cent.

Both the Dow and the S&P have risen 14 per cent since hitting yearly lows on Oct. 3. Only the Dow, however, is higher for the year. The Dow’s up 5.2 per cent for 2011; the S&P and Nasdaq are each down 0.2 per cent.

Trading volume was very light. Just 3.6 billion shares were traded on the New York Stock Exchange, well below the recent daily average of 4.7 billion.

The yield on the 10-year Treasury note rose to 2.07 per cent from 1.97 per cent late Thursday, signalling lower demand for ultra-safe investments. The rise followed news that a survey of US consumer sentiment hit a six-month high this month, better than Wall Street expected. Stocks barely reacted.

LONDON – European stock markets and the euro have pushed higher while government financing costs eased after EU nations signalled they would adopt a tough new fiscal compact to resolve the debt crisis.

On Friday London’s FTSE-100 index of top companies rose 0.83 per cent to 5,529.21 points, while in Frankfurt the DAX-30 added 1.91 per cent to 5,986.71 points and Paris’ CAC-40 jumped 2.48 per cent to 3,172.35 points.

Milan soared 3.37 per cent and Madrid gained 2.23 per cent.

On the eurozone bond market, yields on French, Italian and Spanish debt eased, while those on 10-year German bonds rose slightly.

HONG KONG – Asian markets fell on fears Europe’s leaders will not agree a deal to tackle their debt crisis as the first day of a crucial summit broke up with plans for a full treaty change in tatters.

Tokyo fell 1.48 per cent, or 128.12 points, to 8,536.46 and Seoul shed 1.97 per cent, or 37.64 points, to 1,874.75.

Hong Kong slumped 2.73 per cent, or 521.58 points, to 18,586.23 and Shanghai fell 0.62 per cent, or 14.55 points, to 2,325.27.

WELLINGTON – NZX50 shares rose as Rakon climbed from a record low and Telecom gained to its highest level since the spin-off of its Chorus network unit last week.

The index rose 1.51 points, or 0.04 per cent, to 3271.46. Within the index, 29 stocks fell, 12 rose and 10 were unchanged. Turnover was $NZ78 million ($A59.82 million).