Connect to share and comment

European equities stage rebound

PlacardEnlarge
(Globalpost/GlobalPost)

Most European stock markets rebounded on Wednesday following two days of losses caused by Cyprus' bailout drama.

London's FTSE 100 index of leading companies bucked the trend, losing 0.13 percent to close at 6,432.7 points, as the government vowed more austerity in its latest budget plans.

In Frankfurt, the DAX 30 rose 0.68 percent to 8,001.97 points, while in Paris the CAC 40 jumped 1.43 percent to 3,829.59 points.

Elsewhere, Madrid's IBEX 35 shares index climbed 1.15 percent and Milan's FTSE MIB soared 2.2 percent in value.

"Many would have thought that the vote rejection by the Cypriot parliament last night and extension of the closure of its banks would have sent investors to the hills and peripheral borrowing costs soaring, but that simply hasn't happened," said Angus Campbell, head of market analysis at Capital Spreads trading group.

Eurozone member Cyprus was on Wednesday scrambling to secure funding vital to an international bailout after MPs rejected the terms of an EU deal, tapping Russia, the church and state institutions for cash.

With banks closed and fears growing of a forced eurozone exit, President Nicos Anastasiades huddled with party leaders and financial experts trying to track a way out of the island's worst crisis since the 1974 Turkish invasion.

The meeting comes a day after lawmakers flatly rejected a highly unpopular measure that would have slapped a one-time levy of up to 9.9 percent on bank deposits as a condition for an EU-led 10-billion-euro ($13-billion) loan.

Asian stock markets closed mixed on Wednesday in the wake of the Cyprus vote.

US stocks moved higher in anticipation of a possible resolution to the Cyprus crisis and the outcome of a two-day Federal Reserve monetary policy meeting.

The Federal Open Market Committee's post-meeting statement is expected to reaffirm the Fed's loose monetary policy.

The Dow Jones Industrial Average was up 0.40 percent to 14,513.22 in midday trading.

The broad-based S&P 500 rose 0.56 percent to 1,556.97 points, while the tech-heavy Nasdaq Composite Index increased 0.58 percent to 3,247.79 points.

The European Central Bank has said it will continue to provide financial support for troubled Cypriot banks, a key step to allow all sides a little more time to try to find a way out of the impasse.

But Stan Shamu, market strategist at IG Markets in Melbourne, offered a word of warning, saying: "The Cyprus issue is far from over.

"I don't think it will be a situation where the ECB has stepped in and we don't have to worry about it."

In foreign exchange activity, the euro climbed to $1.2947 from $1.2881 in New York late on Tuesday.

Gold prices slid to $1,607.50 an ounce from $1,610.75 on Tuesday.

European banks' share prices meanwhile recovered on Wednesday after heavy losses in recent days amid concerns over the sector's exposure to Cyprus, and a potential deepening in the eurozone's long-running sovereign debt crisis that has already sparked bailouts for Greece, Ireland and Portugal.

In London, Britain's state-rescued Royal Bank of Scotland won 2.25 percent to 300.2 pence, while Deutsche Bank gained 1.36 percent to 32.44 euros in Frankfurt, French lender BNP Paribas jumped 3.14 percent to 42.24 euros in Paris, and Unicredit jumped 3.95 percent to 3.68 euros.

The London market was buffeted by a new government budget that will keep Britain on the course of austerity.

While the government said Britain should avoid a recession, it halved the forecast for this year to 0.6 percent.

Spreadex trader Max Cohen said "...a less than inspiring budget detailed today by chancellor George Osborne has contributed to the losses seen."

burs-rl/wai

http://www.globalpost.com/dispatch/news/afp/130320/european-equities-stage-rebound-1