Europe stocks follow Wall St higher
Bank stocks recovered their poise today and helped European stock markets push higher as investors assessed the impact of a short-selling ban in four eurozone countries.
The advance in Europe follows big gains on Wall Street on Thursday, which helped support most markets in Asia.
However, wild swings over recent days, with shares often changing direction every few hours, highlight how volatile trading is at the moment amid concerns over the global economy and the levels of debt in the US and Europe.
In Europe, London’s FTSE 100 was up 1.1 % at 5,221 points, while Germany’s DAX was 1.9 % higher at 5,908. The CAC-40 in France was 1.2 % higher at 3,126 even after data showed the French economy did not grow in the second quarter.
Wall Street was poised for a modest retreat after Thursday’s big gains – Dow futures were down 0.6 % at 11,021 while the broader Standard & Poor’s 500 index fell a similar rate to 1,161.
The gains in Europe came after regulators in France, Italy, Spain and Belgium imposed temporary bans on short-selling of financial shares late on Thursday, following sharp sell-offs and temporary gains in French bank shares in particular that they said were fuelled by false rumours.
The share prices of French banks, which fluctuated sharply in recent days appeared to stabilise today, with Societe General up 1.3 % and Credit Agricole up 0.3 %. Belgium’s Dexia was doing particularly well, trading 5.8 % higher.
However, analysts question whether the short-selling ban would be successful in the long run, since many experts claim that a similar move in 2008 actually contributed to investor uncertainty.
The gains in Europe came despite figures showing France’s economy unexpectedly ground to a halt in the second quarter on the back of a sudden reversal in consumer spending and stagnation by the country’s exporters.
The halt in the French economy is set to exacerbate concerns over the eurozone in general, where the three bailout countries of Greece, Ireland and Portugal are in recession and Italy and Spain struggle with lacklustre growth.
France is already facing speculation that it may soon lose its AAA-rating due to its high debt load.
Earlier in Asia, the session was far less volatile than of late.
Hong Kong’s Hang Seng added 0.1 % to 19,620.01. Australia’s S&P/ASX 200 gained 0.8 % to 4,237.90, while benchmarks in New Zealand and Singapore also rose.
But Japan’s Nikkei 225 stock average was lower – closing down 0.2 % to 8,963.72 after spending the morning in positive territory. A stronger yen, which reduces the value of profits earned overseas, pummelled export shares.
Mainland Chinese shares, however, traded higher for a fourth day, with the absence of bad news helping boost sentiment, traders said. The Shanghai Composite Index gained 0.5 % to 2,593.17 while the Shenzhen Composite Index gained 1 % to 1,158.96.
In the oil markets, prices fell as traders booked some profits garnered over the previous session, when crude rose 3.4 %.
Benchmark oil for September delivery was down 55 cents at 85.17 dollars a barrel in electronic trading on the New York Mercantile Exchange.
