Europe Stocks Rise, Euro Steady - Wall Street Journal Europe Stocks Rise, Euro Steady - Wall Street Journal

Wednesday, June 27, 2012

Europe Stocks Rise, Euro Steady - Wall Street Journal

Europe Stocks Rise, Euro Steady - Wall Street Journal

Financial markets were calm Wednesday. European stocks edged higher, supported by positive U.S. and Asian sessions, the euro was steady against the dollar and Spanish and Italian bond yields drifted lower, as investors braced for the European Union summit.

"Although there are pockets of domestic interest elsewhere the upcoming EU leaders' summit remains front and centre for fixed income, as well as other asset classes," said Lloyds Bank Corporate Markets.

In the European morning, the benchmark Stoxx 600 index was up 0.5%. The U.K.'s FTSE 100 index was up 0.5%, France's CAC-40 was up 0.6% and Germany's DAX was 0.7% higher. Spain's IBEX-35 index was off 0.2%, Italy's FTSE Mib was up 0.6% and Greece's ASE index was 1.2% higher.

Yields on Spanish and Italian government bonds eased. The 10-year Spanish government bond yield was down 0.04 percentage point at 6.79%. The corresponding Italian yield was off 0.05 percentage basi points at 6.11%, ahead of an auction of up to €9 billion euros ($11.25 billion) of six-month Treasury bills.

On European foreign exchanges, the euro was pretty steady and trading in a tight range against the greenback, fetching $1.2496 from $1.2492 late Tuesday in New York. The dollar was at ¥79.64 from ¥79.51.

Despite the positive tone in equities, there was little conviction behind the move higher. "The overwhelming weight of negativity surrounding the euro-zone crisis has investors in no real mood to get involved," said Mike McCudden, head of derivatives at Interactive Investor. "Furthermore, Merkel's comments yesterday, however flexible they may be regarding the European Stability Mechanism, are doing little to reassure investors that the current crisis will be on the path to resolution any time soon."

German Chancellor Angela Merkel and French President Fran├žois Hollande are due to meet later Wednesday. This comes after Ms. Merkel reportedly told lawmakers Tuesday that there would be no jointly backed euro-zone bonds in her lifetime.

Skepticism about the outcome of the summit was rife. "Having seen sentiment improve in this regard towards the back end of last week, market participants' belief in a 'successful' outcome at this impending event is subsequently waning," said Lloyds.

In London, Glencore International shares fell after sovereign-wealth fund Qatar Holding, which has a substantial stake in Xstrata, called on Glencore to sweeten the terms of its merger proposal for the company Xstrata. UBS said "there is now a material risk that the merger could fail with both management teams adamant that the current terms are fair and had only been agreed after extensive negotiations."

On the economic calendar, U.K. CBI distributive trades data are at 10 a.m. GMT, while the preliminary estimate of German CPI is due at 12 p.m. GMT. In the U.S., durable goods orders are at 12:30 p.m. GMT, while pending home sales figures are at 2 p.m. GMT.

Among commodities, spot gold was at $1570.90 a troy ounce, down $1.60 from New York, while August Nymex crude oil futures were down 10 cents at $79.26 per barrel and August Brent futures were down 23 cents at $92.79. The September bund contract was down 10 ticks at 141.60.

Write to Michele Maatouk at michele.maatouk@dowjones.com


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