European stock markets rose but the euro fell against the dollar yesterday as traders digested positive bank earnings and a Spanish bond auction ahead of ECB monetary policy announcements.
London’s FTSE 100 index climbed 0.33 per cent to 5,777.24 points in late morning trade, the Paris CAC 40 jumped 1.02 per cent to 3,259.40 points and in Frankfurt the DAX 30 won 0.95 per cent to 6,774.48.
Madrid’s IBEX 35 index rallied 1.17 per cent to 6,911.50 points.
In foreign exchange deals, the euro dropped to $1.3138 from $1.3156 in New York late on Wednesday.
“Positive morning results for (French bank) Societe Generale has buoyed European stock markets today, with (continental Europe) indices up around 1.0 per cent, helping to fight off the pull downwards generated by an unsure French election and Spain’s problems,” said Valbury Capital broker Jonathan Bristow.
Societe Generale on Thursday reported a 20.1-per cent drop in quarterly net profit to €732 million euros owing to a €119-million charge for risky debt.
But the outcome was higher than expected by analysts polled by Dow Jones Newswires who had forecast on average a figure of €630 million.
Societe Generale’s share price rose 1.0 per cent to stand at €18.21 in Paris mid-day trade.
Late in France on Wednesday, French President Nicolas Sarkozy launched fierce assaults on Socialist rival Francois Hollande in a debate before their weekend election clash, but failed to land a decisive blow on the frontrunner.
Before the debate, polls showed Hollande as the favourite to win in Sunday’s run-off vote after he came out slightly ahead of Sarkozy in an April 22 first round when eight other candidates were eliminated.
Meanwhile in France’s troubled eurozone neighbour Spain, a bond auction yesterday resulted in the Madrid government paying sharply higher borrowing costs on three- and five-year debt.
The Treasury attracted solid demand and raised €2.516 billion, more than its original target, but only by offering returns of more than 4.0 per cent for both maturities, central bank data showed.
Later yesterday in the Spanish city Barcelona, the European Central Bank was expected to announce that it was neither cutting interest rates nor providing further special emergency financial measures.
This despite a resurgence in the sovereign debt crisis, as one-by-one, eurozone nations tumble back into recession, according to analysts.
“Despite acknowledging that the economic outlook has deteriorated, (ECB) president Mario Draghi seems set to argue that the ECB has already done enough by providing ample liquidity to the region’s banks and cutting interest rates to record lows,” said Capital Economics economist Julian Jessop.
Asian stock markets mostly fell yesterday following the previous day’s weak jobs data from the United States and Europe as well as figures showing eurozone manufacturing falling for a ninth straight month, dealers said.
The downbeat outlook saw traders shift to safer assets, which weighed on the euro and Australian dollar.
Sydney slipped 0.16 per cent, Seoul fell 0.20 per cent and Hong Kong shed 0.28 per cent. Tokyo was closed for a public holiday.