European stock markets posted solid gains and the euro bounced back from early losses yesterday as positive US and German economic data overcame worries about the fate of the eurozone.
Analysts said investors nonetheless remained on edge on fears that Ireland’s debt crisis could ramp up bond market pressure on the country’s financially vulnerable eurozone partners Portugal and Spain.
“The continued political turmoil in Ireland appears to have become almost secondary as fears about a Spanish contagion roiled investors and as fears rise that European leaders are starting to lose control of the situation in what could fast become a slow-motion train wreck,” warned analyst Michael Hewson of CMC Markets.
But stock markets moved higher on news that US jobless claims fell more than expected last week and that US consumers earned and spent more in October.
Those two reports offset disclosures that orders for large manufactured goods such as planes, cars and home appliances fell sharply last October, when sales of new homes plunged 8.1 per cent.
Germany too contributed to boosting investor spirits, as the country’s Ifo institute said its measure of business confidence soared to 109.3 points in November, smashing expectations.
“I confirm it’s the highest level since reunification,” an Ifo spokesman told AFP. Analysts were euphoric, with one harking back to the “economic miracle” enjoyed by Germany after World War II.
“Maybe it is a miracle after all,” said Carsten Brzeski from ING bank. In London the FTSE 100 index added 1.36 per cent to finish at 5,657.10 points while in Paris the CAC 40 rose 0.62 per cent to 3,747.61 points. In Frankfurt, the DAX gained 1.77 per cent to reach 6,823.80 points.
Elsewhere there were gains of 0.52 per cent in Madrid, 0.51 per cent in Lisbon and 0.83 per cent in Dublin despite mounting debt worries. Amsterdam rose 0.71 per cent, the Swiss Market Index jumped 0.88 per cent and Milan slipped 0.05 per cent.