Shares gain, euro firm as Italy in focus

Fri Nov 11, 2011 6:34am EST
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By Anirban Nag

LONDON (Reuters) - European shares rose on Friday and the euro eked out modest gains as investors bought beaten-down riskier assets, with markets cautiously hopeful that debt-laden Italy will implement tough austerity measures crucial to avoid a euro zone meltdown.

Italy's Senate is due to vote on Friday on austerity steps demanded by the European Union, paving the way for a new emergency government to be formed within days, ending the reign of Prime Minister Silvio Berlusconi.

The eye of the euro zone storm swung from Greece to Italy this week, with yields on benchmark 10-year bonds having risen well above 7 percent -- widely seen as unsustainable.

Analysts fear Italy's potential inability to fund itself could be a systemic risk given the size of its economy and public debt, the third largest in the world.

But fears of a near-term collapse have eased somewhat, lifting stocks, commodities and the euro.

U.S. stock index futures pointed to a higher open on Wall Street, with futures for the S&P 500, Dow Jones up 0.4 percent and Nasdaq 100 futures up 0.7 percent.

Wall Street had rallied on Thursday as investors cheered better-than-expected earnings from U.S. companies.

The FTSEurofirst 300 .FTEU3 index of top European shares was up 0.5 percent at 968.43 points after falling in the previous two sessions. Banks featured among the top gainers, with the sector index up nearly 1.0 percent.   Continued...

<p>A man monitors an electronic board displaying stock prices at the Karachi Stock Exchange November 10, 2011. REUTERS/Akhtar Soomro</p>