Euro shares rocket higher on Chinese stimulus hopes; DAX up 1.96%
Published Jul 13, 2012 11:44AM ET
Near the close of European trade, the EURO STOXX 50 added 1.25%, France’s CAC 40 climbed 1.32%, while Germany’s DAX 30 soared 1.96%.
Depressing equity sentiment, Moody’s slashed Italian government bond rating by two levels to Baa2 and reiterated that additional downgrades may be forthcoming.
Baa2 bond rating is two levels above junk bond status and one level higher than Spanish bonds.
However, Italy’s borrowing costs declined at a debt sales helping support market sentiment.
Adding to the negative growth sentiment, China’s GDP expanded 7.6% last quarter from a year prior. This is down from an 8.1% increase the previous period and the 7.7% average analysts forecast.
In addition, China’s exports grew 11.3% last month down from 15.3% in May. While imports increased 6.3% compared with 12.7%.
However, this Chinese slowdown increased hopes that China will increase government economic stimulus leading to the equity rally.
Meanwhile, U.S. producer price inflation rose unexpectedly last month, official data showed on Friday.
In a report, U.S Bureau of Labor Statistics - Department of Labor said that U.S. PPI rose to a seasonally adjusted 0.1%, from -1.0% in the preceding month.
In London, commodity-heavy FTSE 100 advanced 1.05%..
Storebrand, Norway’s second largest insurance company soared 7% after reporting it will meet capital requirements.
PSA Peugot Citroen dropped 8% to the lowest level since 1989 on worries that the company may be nationalized.
Banking software maker Temenos Group gained 4.9% after plunging yesterday on lowered estimated revenue growth and the CEO resignation.
Neopost added 3.4% after reporting its purchase of GMC Software.
Booker Group gave back 2.5% after Shore Capital Group cut its rating to sell from hold.
In the U.S., equity markets followed higher with the Dow up 1.34%, the S&P 500 higher by 1.32%, while the Nasdaq soared 0.95%.
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