World socks and euro advance on EU rescue hopes

Wed Oct 19, 2011 7:08am EDT
 
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By Anirban Nag

LONDON (Reuters) - European stocks and the euro rose on Wednesday on optimism that policymakers will take major steps at a summit this weekend to tackle the festering debt crisis, offsetting the market impact of a cut in Spain's sovereign credit rating.

German Bund futures were lower as safe-haven government bonds were sold off on a report in Britain's Guardian newspaper that France and Germany had agreed on a deal to increase the euro zone bailout fund's firepower fivefold.

The reported agreement was later denied by two senior European Union officials.

Nevertheless, the FTSEurofirst 300 .FTEU3 index of top European shares was up 1 percent while world stocks as measured by the MSCI index .MIWD00000PUS were up 0.85 percent.

"It's interesting that despite the denial the market still wants to go higher, which implies the market does think there's something in the pipeline," said Jeremy Batstone-Carr, strategist at Charles Stanley, said.

"We'll see more whipsawing in the market in the run-up to Sunday."

The pan-European benchmark is up more than 13 percent from a September low with the latest gains driven by banking stocks. U.S. stock futures pointed to a mixed start on Wall Street with the S&P and Dow Jones futures both up 0.1 percent while the Nasdaq 100 was down 0.4 percent.

Investors were still cautious about the degree of progress policymakers will make at an EU summit on Sunday.   Continued...

 
<p>A foam figure of a bull is seen in front oft he German share prize DAX index board, as the DAX climbs towards 6000 points during the morning trading session at the stock exchange in Frankfurt October 12, 2011. REUTERS/Kai Pfaffenbach</p>