Euro shares rocket higher on Greece, Fed easing speculation;DAX up 1.84%

Investing.com - European stocks rocketed higher Tuesday, as hopes that Greek political leaders will be able to form a solid coalition government and that the Federal Reserve will announce further stimulus measures boosted equity sentiment.

At the close of European trade, the EURO STOXX 50 soared 1.97%, France’s CAC 40 added 1.69%, while Germany’s DAX 30 climbed 1.84%.

European stocks were boosted by hopes that Greece's New Democracy party will form a coalition government with the socialist Pasok party, which would allow Athens to resume negotiations with creditors on its international bailout deal.

The yield on Spanish 10-year bonds eased back to 7.08% from a session high of 7.13%, but remained above the critical 7% threshold amid concerns that a EUR100 billion bailout agreed earlier this month may not be enough to overhaul the country’s ailing banking system.

Meanwhile, sentiment also improved ahead of the Fed’s policy meeting conclusions on Wednesday, amid speculation over the possibility of a third round of monetary stimulus.

Telecom Italia remained one of the session’s top gainers, with shares surging 5.50% on reports the company is about to hold talks with state investment firm Cassa Depositi e Prestiti on the possibility of spinning off the telecommunications operator's fixed-line network.

Germany-based SAP, the world’s largest business-management software maker, was also sharply higher, climbing 1.73%, after its U.S. peer Oracle said that fourth-quarter earnings excluding certain costs were USD4.1 billion, higher than analyst estimates.

Meanwhile, financial stocks were mixed. Shares in French lender Societe Generale fell 0.18% and Germany’s Deutsche Bank tumbled 1.28%, while Dutch lender ING Group rallied 1.73%.

Peripheral lenders added to gains, as Italy’s Intesa Sanpaolo and Unicredit climbed 0.71% and 0.81% respectively, while Spanish lenders BBVA and Banco Santander jumped 1.19% and 1.36%.

In London, commodity-heavy FTSE 100 rallied 0.88%, boosted by strong gains in mining stocks, while data showed that consumer prices in the U.K. unexpectedly fell to their lowest level in two-and-a-half years in May.

Mining giants Rio Tinto and Bhp Billiton extended earlier gains, advancing 1.90% and 0.94% respectively, while copper producers Xstrata and Kazakhmys climbed 0.80% and 1.12%.

Energy stocks also remained on the upside, as shares in BP rose 0.83% and Anglo American climbed 0.70, while Essar Energy surged 3.40%. 

Meanwhile, Home Retail Group skyrocketed 23.36%, after saying that revenue at Argos stores open at least a year fell 0.2% in the 13 weeks ending June 2.

Adding to gains, Whitbread, a U.K.-based hotel, coffee shop and restaurant company, soared 5.96% after saying first-quarter revenue rose 13.9%, spurred by sales growth of 25% at its Costa outlets. The company is also planning to expand its Premier Inn chain and add more Costa stores this year, creating 3,500 jobs.

Elsewhere, financial stocks turned broadly higher, as shares in HSBC Holdings rallied 1.70% and the Royal Bank of Scotland surged 1.68%, while Barclays jumped 1.18% and Lloyds Banking added 0.17%. 

In the U.S., equity markets followed higher with the Dow Jones Industrial Average up 0.94% ,the S&P 500 higher by 1.04%, while the Nasdaq surging 1.21%.

Also Tuesday, data showed that the ZEW index of economic sentiment in Germany tumbled to minus 16.9 in June from 10.8 the previous month, while the index for economic sentiment in the euro zone declined to minus 20.1 from a reading of minus 2.4 in May.

Later in the day, the U.S. was to publish official data on building permits and housing starts. Elsewhere, leaders from the Group of 20 nations were to hold a second day of talks in Los Cabos, Mexico.


Traders are awaiting the U.S. interest rate statement, Bernanke’s comments, as well as Britain’s MPC meeting minutes on Wednesday.