European stocks rise on positive earnings
European stock markets and the euro rebounded yesterday as investors cheered positive company earnings and reacted to news of thousands of job cuts at Swiss bank UBS, despite a lull in trading caused by the monster US storm Sandy.
London’s FTSE 100 index of top companies closed up 0.95 per cent to 5,849.9 points, while in Frankfurt the DAX 30 gained 1.13 per cent to 7,284.4 points, and Paris’ CAC 40 jumped 1.48 per cent to 3,459.44 points.
Madrid’s IBEX 35 climbed 1.36 per cent to 7,833.9 points despite data showing that the Spanish economy contracted by 0.3 per cent in the third quarter.
European stock markets had closed lower on Monday awaiting pivotal debt talks on Greece due this week and in thin volume owing to US trading being suspended as Sandy bore down on New York.
“Although the US markets remain closed for the second day in a row, courtesy of Sandy, which is not only affecting the trading volumes but also interrupts the presidential election (race) – European markets experience what, given the circumstances, could be called a rally,” said Gekko Global Markets trader Anita Paluch.
“The boost comes from the better than expected earnings results reported by heavyweight companies like Deutsche Bank and BP. The UBS news to slash the jobs is also interpreted in a positive way.”
In an additional positive development for eurozone sentiment, Greek Prime Minister Antonis Samaras said the country had reached agreement with international creditors on a new wave of austerity measures necessary to unlock new bailout loans it needs by next month to avoid bankruptcy.
Shares in UBS rallied 5.87 per cent to 13.89 Swiss francs on an index up 0.48 per cent overall. The banking giant on Tuesday announced nearly 10,000 job cuts worldwide, saying that the costs of restructuring its hard-hit investment bank had pushed it deep into loss in the third quarter.
In Frankfurt, Deutsche Bank’s share price jumped 4.51 per cent to €34.79 after the German lender announced a better-than-expected performance in the quarter.
Deutsche Bank said in a statement that its net profit after minority interests rose by three per cent to €747 million in the period from July to September.
In London, BP advanced 4.20 per cent to 442.85 pence after better-than-expected earnings for the third quarter.
In foreign exchange trading yesterday, the euro ose to $1.2972 from $1.2900 late in New York on Monday, as traders brushed aside news of rising German unemployment.
Gold prices gained to $1,710 an ounce on the London Bullion Market from $1,707 an ounce on Monday.
Tokyo’s stock market closed lower yesterday after the Bank of Japan announced monetary easing that was only slightly bigger than market forecasts and cut its growth outlook.