Hopes rise for euro zone deal after S&P warning
By Richard Hubbard
LONDON (Reuters) - Global stocks halted their rally and most euro bond yields rose on Tuesday after rating agency Standard & Poor's threatened to downgrade 15 euro nations, but the euro drew some support from the view that the bloc's leaders might now be spurred into more decisive action.
The unprecedented warning by S&P, which sent the MSCI world equity index .MIWD00000PUS down nearly 0.5 percent, was being seen as a wake-up call that could help Germany and France force through treaty changes at a summit this week.
U.S. stock index futures were higher, pointing to a stronger start on Wall Street.
The euro also recovered, buoyed in part by a surprise jump in German industrial orders as well as expectations euro zone policymakers will stitch together a deal to save the currency bloc.
The timing of S&P's announcement and the inclusion of Europe's economic powerhouse Germany among the 15 countries facing a ratings cut has put the focus firmly on the need for the next EU summit to deliver.
"It highlights the importance of the weekend," said Jim O'Neill, the chairman of Goldman Sachs Asset Management.
"If they (EU leaders) come up with something along the lines they have been talking about, I doubt they (S&P) will go through with it," he added.
European stocks as measured by the FTSEurofirst 300 .FTEU3 were around 0.4 percent lower, off a five-week high struck on Monday. Continued...