European stocks, euro extend gains

LONDON — Europe’s main stock markets rose on Tuesday, building on gains from Monday on the back of growing expectations of a full financial bailout for Spain.

By (AFP)

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Published: Tue 2 Oct 2012, 6:17 PM

Last updated: Tue 7 Apr 2015, 12:55 PM

After falling at the start of trading, London’s benchmark FTSE 100 index of top companies was up 0.13 percent at 5,827.69 points in late morning deals.

Frankfurt’s DAX 30 climbed 0.29 percent to 7,347.67 points and the Paris CAC 40 won 0.03 percent to 3,435.58.

Madrid’s IBEX 35 index rallied 1.10 percent to 7,872.00 points.

In foreign exchange trading, the euro climbed to $1.2910 from $1.2896 late in New York on Monday. Gold prices edged down to $1,779.28 an ounce on the London Bullion Market from $1,787 an ounce on Monday.

Gold, seen as a haven in times of economic unrest, hit an 11-month high point of $1,791.45 an ounce on Monday before traders banked profits.

“The ongoing sovereign debt crisis in Europe and a US economy struggling to recover at a more meaningful pace are good enough reasons to support the precious metal for now,” said Simon Denham, head of Capital Spreads trading group.

As Spain lurched towards a sovereign bailout, government data published Tuesday showed that the nation’s jobless queue grew by nearly half a million people in the year to September.

Spain has been in recession since late 2011, its second downturn since the bursting of a property bubble in 2008 that destroyed millions of jobs and left the banking sector strewn with bad loans.

The grim economy, bulging deficit and high borrowing costs are driving Spain towards seeking a full-blown bailout. The government says it wants to know more about the conditions, however, before making a decision.

Stock markets had rallied on Monday — the start of the fourth quarter — as traders tracked Spanish debt strains and the revival of a merger bid by commodities sector giants Xstrata and Glencore.

“Yesterday’s rebound suggests that markets believe that at some point fairly soon Spain will feel compelled to request further aid, in addition to the banking bailout agreed at the June EU summit,” said Michael Hewson, an analyst at CMC Markets trading group.

European stock markets enjoyed a strong July-September as easing concerns about the economy amid fresh stimulus action by central banks resulted in a gain of about 13 percent for the German DAX, while Spain’s IBEX won around 9.0 percent in value.