European stock markets closed higher and the euro climbed against the dollar yesterday following positive government bond sales by France and Spain despite downgrades for the major eurozone economies.
Sentiment was also boosted by encouraging US economic data and International Monetary Fund plans to stock its coffers for crisis fighting.
In London, the FTSE 100 index of leading shares closed up 0.68 per cent at 5,741.15 points. In Paris, the CAC-40 index jumped 1.96 per cent to 3,328.94 points and in Frankfurt the DAX 30 rose 0.97 per cent to 6,416.26 points.
Madrid jumped 2.17 per cent and Milan gained 2.45 per cent.
Italy was also hit Friday by a Standard & Poor’s two-notch downgrade.
In Athens, the bourse gained 2.94 per cent, having been up more than four per cent earlier on growing optimism that the government will finally reach a crucial debt deal with private creditors.
“If the Greek situation is resolved in time, chances rise that the crisis will remain under control for longer, even without a decisive and more direct intervention” by the European Central Bank, Berenberg Bank senior economist Christian Schulz said in a research note.
Athens faces a mid-March deadline to obtain new financing if it is not to become the first developed country in 60 years to declare a debt default.
In New York, the Dow Jones Industrial Average was up 0.25 per cent while the broad-based S&P 500 added 0.80 per cent at around 1650 GMT.
Wall Street equities were “buoyed by some upbeat US economic and earnings news while continued success in debt auctions across the pond is also lending support to sentiment,” Charles Schwab analysts said.
New claims for US unemployment benefits fell sharply last week to the lowest level in more than three years, official data showed, confirming recent signs of healing in the labour market.
Earnings news was also positive. “The latest figures from . . . Bank of America and Morgan Stanley were well-received, as was eBay’s turn in the earnings limelight,” said Andrea Kramer at Schaeffer’s Investment Research.
The euro meanwhile rallied to $1.2925 from $1.2862 in New York late Wednesday after France and Spain both raised funds at much lower rates as investors seemed to largely discount today’s Standard & Poor’s eurozone ratings downgrades.