European shares closed higher and the euro firmed yesterday, helped by a successful Spanish bond issue and strong US data which helped calmed nerves over the eurozone sovereign debt crisis.
Dealers said sentiment also got a boost from the latest eurozone manufacturing and services survey which showed that a sharp slowdown in the last quarter may be easing, at least in Germany and France.
A series of US indicators on jobs and activity, especially a sharp drop in new unemployment claims, were welcomed after heavy losses on Wednesday sparked by fresh concerns over the eurozone debt crisis.
In London, the FTSE-100 index of top companies closed up 0.63 per cent at 5,400.85 points. In Paris, the CAC-40 rose 0.76 per cent to 2,998.73 points and in Frankfurt the DAX 30 gained 0.98 per cent to 5,730.62 points. Other markets posted similar gains, with Madrid up 0.84 per cent as Milan put on 1.37 per cent.
In late afternoon trade, the European single currency advanced to $1.3024 from $1.2979 in New York late Wednesday when it hit an 11-month low of $1.2946 after Italy had to pay very high rates to raise fresh funding in the market.
Spain raised €6.0 billion ($7.8 billion), well above the planned €2.5-€3.5 billion even though the rates paid to buyers remained high at more than 5 per cent on the 9- and 10-year bonds.
“All in all, the bond auction was digested well by the market, particularly given the volatility of bond markets at present, and this helped to give European stocks a fillip,” said City Index analyst Joshua Raymond.
“Investors are making clear that that are less dissatisfied with Spain’s fiscal position than that of Italy,” Mr Rabobank analyst Jane Foley told AFP. In New York, US stocks were up but off early highs after three straight falls, supported by a sharp downturn in US weekly jobless claims.
The blue-chip Dow Jones Industrial Average was up 0.63 per cent and the tech-heavy Nasdaq Composite gained 0.18 per cent at around 1645 GMT.
US initial jobless claims fell 19,000 in the week ending December 10 from the prior week, to 366,000, the lowest reading since the week ending May 10, 2008.
“This is unexpectedly great news,” said Ian Shepherdson, chief US economist at High Frequency Economics. “If claims can remain at this level, payroll growth will strengthen markedly within a month or so.”
Other figures showed the US trade deficit fell to its lowest level in almost two years, thanks in large part to growing exports, while manufacturing in the Philadelphia and New York regions was stronger.