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European shares climb ahead of EU summit

Europe’s main stock markets advanced cautiously yesterday and the euro hit a one-month high above $1.31 on easing eurozone debt crisis concerns ahead of a two-day EU summit.

At the close, London’s FTSE 100 index of top companies gained 0.69 per cent to 5,910.91 points, helped along by upbeat British labour market data.

Frankfurt’s DAX 30 added 0.25 per cent to 7,394.55 points, in Paris the CAC 40 rose by 0.76 per cent to 3,527.50 points, and Madrid’s IBEX 35 gained 2.37 per cent to 8,128.20 points amid insistent bailout speculation.

The euro stabilised at $1.3135 after hitting $1.3140, the highest level since September 17, following a re-affirmation of Spain’s credit rating by Moody’s Inves-tors Services.

Yields on Spanish bonds fell on the secondary government debt market, and Portugal raised short-term money at rates which were on the whole much lower than at recent auctions.

The rate, or yield, on Spanish 10-year debt fell to 5.463 per cent on the secondary market from 5.805 per cent late on Tuesday.

Gold prices increased to $1,749 an ounce on the London Bullion Market from $1,746.50 an ounce.

US stocks wavered in midday trade after two days of solid gains, with the mood dampened by disappointing earnings from Intel and IBM.

Around 1600 GMT, the Dow Jones Industrial Average dipped 0.07 per cent, while the broad-based S&P 500 rose 0.36 per cent and the tech-rich Nasdaq firmed 0.16 per cent.

Asian stock markets were boosted earlier yesterday by increased confidence in the eurozone after Moody’s maintained Spain’s credit rating, while Madrid seemed to move closer to asking for a bailout.

Hong Kong rose 0.99 per cent, Tokyo jumped 1.21 per cent, Sydney added 0.82 per cent and Seoul was 0.70 per cent higher.

Moody’s gave Spain some much-needed relief on Tuesday when it held the country’s rating at “Baa3”, one notch above “junk” status, citing the European Central Bank’s willingness to buy government bonds to stabilise its borrowing rate.

Moody’s also pointed to Madrid’s commitment to implementing fiscal and structural reforms necessary to improve its finances as well as efforts to restructure the banking sector and strengthen the banks.

However, the agency kept Spain on a “negative outlook”.

Also, a senior Spanish official has said that Madrid was considering a request for a line of credit from the European Stability Mechanism (ESM) rescue fund, the Wall Street Journal reported.

French President Francois Hollande declared yesterday an end to the sovereign debt crisis in the eurozone was “very close”.

Hollande said in an interview with Le Monde and five other European newspapers that EU leaders had established the basis for recovery with commitments made to cutting deficit and debt levels at a summit in June.

“On the exit from the eurozone crisis, we are close, very close,” Hollande said. “That is because we took the right decisions at the summit of June 28-29 and because it is now our duty to apply them rapidly.

“Firstly that means resolving definitively the situation of Greece, which has made so many efforts and must be assured of remaining in the eurozone.”

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