Is the eurozone debt crisis over now?
Dec. 9, 2011, 10:37 a.m. EST · CORRECTED
Banks drive Europe gains as EU summit ends
Goldman Sachs upgrades banking sector to neutral
By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — European stock markets rose Friday afternoon, buoyed as investors took a positive view on progress made over the sovereign debt crisis at the European Union summit and a gauge of U.S. consumer sentiment hit a six-month high.
The Stoxx Europe 600 index (XX:SXXP +1.14%) rose nearly 1% to 240.08. The index fell 1.5% on Thursday after Mario Draghi, president of the European Central Bank, dashed hopes for more aggressive purchases of government bonds. The ECB cut its main refinancing rate by 25 basis points to 1%, which was expected.
A choppy session turned sharply higher towards the later part of Europe’s trading day, with banks and oil stocks largely supporting the Stoxx 600. Upward momentum was cemented as a U.S. consumer sentiment survey revealed the highest reading since June, driving Wall Street higher.
Meanwhile, European leaders pushed ahead for plans to implement tough new fiscal rules, though fell short of getting all 27 members to amend the EU treaty. Officials said 17 euro-zone nations, plus six others will take part in a new inter-governmental treaty on fiscal discipline.
Euro-area and other European states also pledged additional resources of up to €200 billion ($266.73 billion) to fight the sovereign debt crisis.
Stocks in Italy, a country that has particularly come under pressure amid the crisis, shot higher, with the FTSE MIB index (XX:FTSEMIB +3.31%) soaring 2.6% to 15,373.39, led by a nearly 6% rise for UniCredit SpA (IT:UCG +6.96%) and a 6% gain for Intesa Sanpaolo SA (IT:ISP +7.86%).
Frances Hudson, global thematic strategist with Standard Life, said equity markets are taking a constructive view of the summit. “In a world of black and white we’re certainly not white, but the shade of grey is somewhat lighter,” she said.
“I’ve had an extremely different reaction when I’ve talked to the bond side who are totally, totally underwhelmed by progress made,” said Hudson. “We’re still seeing big divisions between what the bond markets and what equity markets are reading in.”
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