In Europe: Europe Stocks Gain Amid Greece Aid Talks

9 February 2012


Happy is the day that Greece does not dominate headlines! In the mean time sit tight… more talks are underway.

European stocks rose for the first time in four days as regional finance ministers prepared for talks on a Greek bailout. Treasuries gained and the cost of insuring against default increased.

The Stoxx Europe 600 Index added 0.3 percent at 7:45 a.m. in New York, while Standard & Poor’s 500 Index futures lost 0.2 percent. The U.S. 10-year yield fell two basis points to 2.01 percent, and the Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments climbed six basis points to 327.5. The 10-year gilt yield advanced two basis points after the Bank of England said it will expand asset purchases. A gauge of commodities extended this year’s longest rally.

Greek Finance Minister Evangelos Venizelos heads to the meeting in Brussels today after politicians failed to finalize new austerity measures needed to secure a 130 billion-euro ($173 billion) rescue package. European Central Bank President Mario Draghi may face questions on the bank’s possible role in helping Greece cut its debt after leaving interest rates on hold today.

“History tells us that a deal in Greece will be reached at the last minute,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “A lot of indications show they are heading in that direction even though there are endless delays.”

Three shares advanced for every two that fell in the Stoxx 600. Daimler AG rallied 4.2 percent to a six-month high, leading gains in automakers, as it reported a 39 percent surge in fourth-quarter profit. Credit Suisse Group AG (CSGN) dropped 3 percent as the second-biggest Swiss bank reported a loss in the fourth quarter for the first time since 2008, hurt by “adverse markets” and costs to reorganize the investment bank.

Bull Market

Global stocks entered a bull market yesterday as the MSCI All-Country World Index extended its gain from its October low to 20 percent. Profits beat projections at 49 percent of the 821 companies in the global benchmark that released quarterly results since Jan. 9, according to data compiled by Bloomberg.

The S&P 500 has advanced for two straight days, reaching the highest level since July 7. A government report at 8:30 a.m. in Washington may show initial claims for U.S. jobless benefits rose to 370,000 last week, from 367,000 in the prior period, according to a Bloomberg survey of economists.

Yield Spread

The yield on 10-year Spanish bonds rose six basis points, sending the extra yield investors demand to hold the debt instead of German bunds six basis points higher. The 30-year U.S. Treasury bond yield was little changed at 3.15 percent before the government sells $16 billion of February 2042 debt, the third of three auctions this week totaling $72 billion.

The S&P GSCI gauge of 24 commodities climbed 0.4 percent. Aluminum rose 1.4 percent and Brent crude advanced 0.6 percent to $117.91 a barrel, the eighth consecutive gain and the longest advance for the March futures contract since October 2009.

The MSCI Emerging Markets Index (MXEF) slipped 0.2 percent. The Hang Seng China Enterprises Index (HSCEI) retreated 0.3 percent after data showed inflation accelerated more than economists estimated in January. Hungary’s BUX Index (BUX) fell 1 percent. Benchmark indexes gained at least 0.4 percent in Turkey, Taiwan and South Korea.

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