Euro zone deal optimism lifts world stocks
By Richard Hubbard
LONDON (Reuters) - Confidence that European leaders will come up with a credible plan to lead the region out of its debt crisis at a crucial summit this week lifted world stocks and boosted the price of troubled euro zone bonds on Monday.
The positive mood in Europe looks set to add to the glow from last week's U.S. jobs data with stock index futures pointing to a higher open for equities on Wall Street.
"The U.S. economy has been resilient to market turmoil of recent months but remains vulnerable to a deterioration in Europe," Julia Coronado, BNP Paribas North America chief economist, said in a note.
Market sentiment was given an early boost after Italy unveiled a 30-billion-euro package of austerity steps, and the Irish government too said it would do the something similar in a new budget to be announced later in the day.
The positive mood drove Italian bond yields further below the worrying 7 percent level at which they are seen as unsustainable and the cost of insuring Italian debt against default also fell.
The poor state of the euro zone's economy, however, was underlined by business surveys suggesting there will be a steep economic contraction in the current quarter.
Despite this, retail sales data for October were better than expected.
European stocks were slightly higher with the FTSEurofirst 300 .FTEU3 gaining just under 1 percent, building on last week's biggest weekly gain since late 2008. Continued...