European stocks head upwards

European stock markets ended the week on a high note yesterday, with Frankfurt’s blue-chip DAX 30 index breaking above the 7,000-point level on a eurozone defence by German Chancellor Angela Merkel.

The DAX gained 0.64 per cent to close at 7,040.88 points after already breaking briefly through the key level on Thursday for the first time since early April.

Banking stocks led the German gains after Mrs Merkel said in Canada on Thursday that she backed European Central Bank chief Mario Draghi’s position on making sure the euro would not fail.

Commerzbank jumped 3.27 per cent to €1.26 and Deutsche Bank was 3.53 per cent higher at €26.72.

As head of Europe’s biggest economy, Mrs Merkel is key to the success of any plan to save the 17-nation eurozone.

“Her backing of the ECB’s crisis fighting strategy revived the expectations that policymakers will actually get together to sort out the problems the eurozone has been facing in an efficient way and helped the markets to shake off the painful low volatility and improve the risk sentiment,” Gekko Markets analyst Anita Paluch said.

Elsewhere, London’s FTSE 100 index was up 0.32 per cent at 5,852.42 points, while in Paris the CAC 40 added 0.23 per cent to 3,488.38 points.

Despite weak sessions on Monday and Wednesday, the DAX posted a five-day gain of 1.39 per cent, while the FTSE 100 rose by a modest 0.09 per cent.

In one-day trading yesterday, Milan climbed by 1.30 per cent, while Madrid rallied 1.94 per cent on comments by Spanish officials that it will soon request a first payment for its deeply troubled banks from an emergency eurozone rescue line.

“Markets continue to drift higher on expectations of the prospect of additional central bank easing, with trading volumes remaining well below seasonal averages,” said Michael Hewson, senior analyst at trading group CMC Markets.

“The absence of any good news has failed to dampen expectations; if anything, it has reinforced the expectation that the authorities will take the necessary action to mitigate any problems in the coming weeks.”

In foreign exchange deals, the euro slipped to $1.2311 from $1.2355 late on Thursday in New York.

On Wall Street, US stocks were higher in midday trade yesterday, with the Dow Jones Industrial Average up by 0.14 per cent at 13,268.61 points.

The broader S&P 500 added 0.08 per cent to 1,416.58 points, while the tech-heavy Nasdaq gained 0.29 per cent to 3,071.21 points.

On the downside, shares in Lonmin, the world’s third-largest platinum producer, slid in London as violence at a Lonmin mine in South Africa resulted in the killing of at least 44 people.