Stocks Climb On Italy Bank Action
LONDON, , (UrduPoint / Pakistan Point News, app - 13th Dec, 2016 ) - European stock markets rose solidly Tuesday, led by Milan's main index and Italian banking shares, after ailing UniCredit said it would axe thousands of jobs and raise billions of euros.
Wall Street also posted gains as attention was focused on a much-anticipated Federal Reserve rate meeting, while analysts said a Trump-fuelled rally that saw the Dow reach another record close Tuesday may have been overdone.
Leading Asian stock markets ended higher, with Tokyo closing at a one-year high. Oil prices advanced as the International Energy Agency hiked its forecast for global crude demand growth, but then ran into profit-taking.
At the European close, Paris stocks set a new 2016 high and Frankfurt rose by nearly one percent, while Milan rallied by 2.5 percent. Outside the eurozone, London gained 1.1 percent as traders assessed a bigger-than-expected jump to British inflation, partly the result of a weaker pound following the Brexit referendum.
Separate data showed that despite uncertainty over Italy's troubled banks and upcoming elections in Europe, investor confidence in Europe's economic powerhouse Germany held steady this month. - Recapitalising Italy's banks - ================================ Mike van Dulken, head of research at Accendo Markets, said stock market sentiment was buoyed Tuesday "by suggestions of progress in recapitalising Italy's troubled banks as well as expectations that the Fed will...
still signal a cautious path for further rate hikes" following an expected raise Wednesday. Italy's biggest bank, UniCredit, announced plans Tuesday to slash 14,000 jobs as the country gets to grips with political instability and a banking crisis.
The bank, one of the worst performers in European bank stress tests, confirmed it would also need 13 billion euros ($13.8 billion) in fresh capital from investors despite political complications in Italy and the nation's third-largest bank scrambling to avoid a government-led rescue.
UniCredit shares surged by 15 percent following the announcement, helping lift banking shares everywhere in Europe. There is meanwhile little doubt that the US Federal Reserve will raise its benchmark interest rate on Wednesday for only the second time in a decade.
Any rate move would come against the backdrop of US unemployment at a nine-year low, with jobs being created at an average of 180,000 per month. The world's biggest economy also grew at better than three percent in the most recent quarter amid some signs of a pickup in inflation.
Investors are already looking past this week's Fed decision for guidance on next year's rate moves, but Craig Erlam, at Oanda, said that rising oil prices and the Trump administration's spending plans are clouding the outlook.
"The Fed may be forced to raise interest rates at a faster pace that it had planned and the markets have currently priced in," he said. - Key figures around 1645 GMT - =============================== London - FTSE 100: UP 1.1 percent at 6,968.57 points (close) Frankfurt - DAX 30: UP 0.8 percent at 11,284.65 (close) Paris - CAC 40: UP 0.9 percent at 4,803.87 (close) Milan - FTSE Mib: UP 2.5 percent at 18,827.61 (close) EURO STOXX 50: UP 1.2 percent at 3,237.10 New York - Dow: UP 0.4 percent at 19,880.34 Tokyo - Nikkei 225: UP 0.5 percent at 19,250.52 (close) Hong Kong - Hang Seng: UP 0.1 percent at 22,446.70 (close) Shanghai - Composite: UP 0.1 percent at 3,155.04 (close) Euro/dollar: UP at $1.0653 from $1.0636 Monday Dollar/yen: UP at 115.07 yen from 115.04 yen Pound/dollar: UP at $1.2690 from $1.2678 Oil - West Texas Intermediate: UP 8 cents at $52.91 per barrel Oil - Brent North Sea: DOWN 20 cents at $55.49