Europe’s main stock markets rose yesterday, shrugging off Standard & Poor’s slashing Spain’s credit rating, and gained added steam from a big drop in US jobs claims.
London’s benchmark FTSE 100 index of top companies ended the day up 0.92 per cent at 5,829.75 points, while in Frankfurt the Dax 30 added 1.06 per cent to 7,281.7 points and in Paris the CAC 40 jumped 1.42 per cent to 3,413.72 points.
Wall Street also clocked gains after the US Labor Department reported that new claims for unemployment insurance benefits plunged unexpectedly last week to a four-year low of 339,000.
In midday trade the Dow Jones Industrial Average had climbed 0.19 per cent to 13,370.78 points, while the S&P 500 gained 0.42 per cent to 1,438.56 points, and the tech-rich Nasdaq added 0.26 per cent to 3,059.82 points.
In foreign exchange trading, the euro rose to $1.2929 from $1.2887 late in New York on Wednesday. Gold prices advanced to $1,769 an ounce on the London Bullion Market from $1,761.25 an ounce on Wednesday.
“Stocks and commodities have caught a tailwind today, boosted by better than expected jobs numbers out of the United States,” said CMC Markets analyst Colin Cieszynski.
Spain vowed yesterday to defy predictions of a deep recession next year after the credit rating downgrade left its debt hovering just above junk-bond status.
Standard & Poor’s sliced the nation’s rating late on Wednesday, citing a deepening recession with one-quarter of workers unemployed, mass protests, and growing political friction between Madrid and the debt-struck regions.
S&P cut the rating to BBB- from BBB+, just one level above “speculative” or “junk” grade debt, which could have sent Madrid’s borrowing costs skyrocketing to untenable levels.
Madrid’s IBEX 35 index spent the morning down, but climbed into positive territory after the US jobs numbers, and ended the day with a gain of 0.87 per cent.
Spanish bond yields even eased slightly yesterday, down to 5.764 per cent from 5.804 per cent on Wednesday.
Investors in Europe were also digesting a clutch of earnings updates yesterday.
In London, shares in Burberry soared 9.97 per cent to 1,136 pence after the British luxury clothing and accessories group’s second-quarter performance reassured markets despite a recent profits warning.
Burberry added that it would bring its perfume business totally in-house following the end of a licence relationship with French company Interparfums early next year.
Burberry said sales grew by three per cent during its second quarter, or three months ending September 30, to £475 million (€591 million), which compared with 11 per cent growth in the group’s first quarter.
Despite the slowdown, Seymour Pierce financial group said in a note to clients they were “reassured that demand has not fallen off a cliff and so believe the shares have been oversold” in recent weeks. (AFP)