World stock markets surged yesterday, propelled by bank shares, and the euro jumped against the dollar after a key EU summit delivered surprise emergency measures to fight the eurozone debt crisis.
The Madrid and Rome markets were the biggest gainers after emergency aid to crisis-hit Spain and Italy was announced following marathon talks at a summit to save the ailing single currency.
In Frankfurt, the DAX 30 rose 4.33 per cent to 6,416.28 points and Paris’ CAC 40 soared 4.75 per cent to 3,196.65 points. Milan rocketed up by 6.59 per cent, while Madrid rose by 5.66 per cent and Athens by 5.68 per cent.
London’s benchmark FTSE 100 index ended the day up 1.42 per cent at 5,571.15 points, with a series of banking scandals tempering enthusiasm.
Among individual shares, Spanish bank BBVA soared nine per cent, French lender BNP Paribas rallied 9.7 per cent and Deutsche Bank won 5.91 per cent.
British banks’ gains were less robust after HSBC and Barclays were ordered by the country’s financial watchdog to compensate businesses for “serious failings” in the sale of complex products.
“European equities are trading sharply higher... after intense negotiations among EU leaders lasting until early morning rather surprisingly yielded an agreement,” said ETX Capital trader Markus Huber.
“It needs to be seen, however, if these developments and measures are indeed enough to calm markets long-term with periphery bond yields establishing a firm downward trend, or if relief will be only temporary.”
In foreign exchange deals, meanwhile, the euro soared to $1.2675 from $1.2442 late in New York on Thursday.
On European bond markets, the Spanish 10-year rate fell to 6.472 per cent in afternoon trading from 6.896 percent on Thursday, with the difference between its borrowing costs and those of Germany – a key measure of market tension – significantly falling back below five percentage points.
The yield on 10-year Italian bonds also dropped, easing to 5.866 per cent compared to 6.182 per cent on Thursday.
Germany’s 10-year bond yield rose to 1.627 per cent from 1.512 per cent, while France’s yield nudged up to 2.698 per cent from 2.664 per cent.
Asia stock markets closed sharply higher, with Tokyo climbing 1.50 per cent, Seoul winning 1.91 per cent and Sydney closing up 1.23 per cent.
Wall Street also surged, with the Dow Jones Industrial Average climbing 1.74 per cent at 12,820.98 points in midday trade.
The S&P 500 index gained 1.94 per cent to 1,354.87 points, while the tech-rich Nasdaq jumped 2.36 per cent to 2,916.65.
The accord struck in Brussels paves the way for the eurozone’s €500-billion bailout fund to recapitalise ailing banks directly.