Stocks gain on crisis-fight optimism

EUROPEAN stocks gained yesterday, paring weekly losses, while the euro rose and Spanish and Italian bonds rallied amid optimism the EU will meet a deadline of December 19 for funding a crisis-fighting package.

The MSCI All-Country World Index of shares climbed 0.6% yesterday, trimming its weekly slump to 3.2%. The Standard & Poor’s 500 Index advanced 0.9% to 1,226.17. The euro rose 0.1% to $1.3033.

Yields on 10-year Spanish and Italian government debt dropped 19 basis points and 22 basis points, respectively. Copper futures jumped 1.9%, ending a four-day losing streak.

The euro gained after Luxembourg’s Jean-Claude Juncker, who leads a group of finance ministers from the region, said the EU should meet an informal December 19 deadline for arranging loans to the IMF.

Italian Prime Minister Mario Monti also won a confidence vote on his €30 billion emergency budget plan.

“It’s been the typical sort of spray of comments coming out of Europe,” said Liam Dalton, who oversees $1.8bn (€1.3bn) as chief executive officer of Axiom Capital Management Inc in New York.

“The bounce today is just partly because of this steep down trend that we’ve been in since early December. We get oversold, we bounce. It’s symptomatic of a very indecisive market.”

Europe’s shared currency pared gains after Germany’s Bundesbank said it saw “no urgent need” to reach a decision on the IMF loans.

At a December 9 EU summit, countries were given 10 days to say “what’s happening and we’re collecting this at the moment,” Juncker said in Luxembourg yesterday. Asked if the EU would meet its deadline, he said: “I think so.”

An hour later, the Bundesbank said it would not rush to a decision on the loans, which are to be provided by EU national central banks.

“We don’t see an urgent need for a final decision,” a Bundesbank spokesman said. “We want to evaluate the whole situation.”

The benchmark measure of US stock options traded the farthest below its 200-day average since July as improving American economic data offset concerns about Europe’s debt crisis.

Bloomberg