Sun, Dec 02, 2012 - Page 15 News List

European stocks rise on Greek resolution

OPTIMISM:Analysts said equities also received a boost from confidence that US lawmakers would eventually reach an accord and better consumer confidence data


European stocks rose for a second week, posting the longest monthly winning streak since 2006, after eurozone finance ministers eased the terms of loans to Greece and amid optimism that US lawmakers would reach a budget agreement to avoid the so-called “fiscal cliff.”

The benchmark STOXX 600 climbed 0.9 percent to 275.78 this week, for a monthly gain of 2 percent. The gauge has risen 18 percent from this year’s low on June 4, as the European Central Bank announced an unlimited bond-buying plan and the US Federal Reserve started a third round of asset purchases.

“The market was very focused on the political developments in Washington this week,” said Konstantin Giantiroglou, head of investment advisory at Neue Aargauer Bank in Brugg, Switzerland. “The fiscal-cliff issue will lose some importance going forward. Market participants have to some extent adjusted their expectations concerning the outcome of this political wrangle. An accord will be found at the last minute.”

US President Barack Obama and Republican Speaker of the House John Boehner this week fueled optimism an agreement could be reached to avert more than US$600 billion in spending cuts and tax increases scheduled to begin on Jan. 1.

“In the end, they will work something out, but it could be choppy in the shorter term,” Richard Buckland, Citigroup Inc’s London-based chief global equity strategist, said in a Bloomberg Television interview.

Consumer confidence in the world’s largest economy rose last month to the highest level in more than four years. The Conference Board’s confidence index climbed to 73.7, the highest since February 2008, from a revised 73.1 reading the previous month, a report showed on Tuesday. That exceeded the median forecast of economists that projected a reading of 73.

In Europe, finance ministers eased the conditions on aid for Greece. In the latest bid to keep the 17-nation euro-area intact, they cut the rates on bailout loans, suspended interest payments for a decade on money from the temporary rescue fund, gave the country more time to repay and outlined a Greek bond buyback. They cleared Greece to get a 34.4 billion euro (US$44.7 billion) loan installment this month.

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