European stocks surge on debt plan; DAX up 3.28%

Investing.com - European stock markets rose sharply on Thursday, surging to a twelve-week high after European leaders announced a new plan to tackle Greece's financial woes and avoid debt contagion in the region.

During European morning trade, the EURO STOXX 50 surged 3.36%, France’s CAC 40 jumped 3.40%, while Germany’s DAX 30 soared 3.28%.

European leaders said they had reached an agreement with private banks on a voluntary 50% reduction of Greece's debt. The writedown will reduce Greece’s debt burden from 160% of GDP to a more sustainable 120% by 2020.

Leaders also agreed to expand the firepower of the euro zone's bailout fund, the European Financial Stability Facility, but the final details on how to enlarge the fund were not expected to be agreed until November.

The financial sector posted strong gains, with France's Credit Agricole skyrocketing 15.70% and BNP Paribas surging 12.44%, while German lenders Deutsche Bank and Commerzbank jumped 9% and 8.76%.

Peripheral lenders also largely contributed to gains, as Italian bank Unicredit soared 6.90% and Intesa Sanpaolo climbed 7.87%, while Spain's BBVA and Banco Santander advanced 5.01% and 3.74% respectively. 

Meanwhile, BASF, the world's largest chemical company saw shares increase 4.70% after reporting a higher-than-expected third-quarter profit, while Europe's biggest oil company, Shell climbed 1.59% after saying its third-quarter earnings doubled as it ramped up projects from Qatar to Canada.

In London, FTSE 100 advanced 1.91% tracking gains in the financial sector as risk sentiment recovered after Wednesday's European summit.

Banks were among the U.K.'s top gainers as shares in Barclays shot up 10.24% and the Royal Bank of Scotland surged 7.26%, while Lloyds Banking advanced 6.89% and HSBC Holdings climbed 4.16%.

Mining giants Rio Tinto and Bhp Billiton also contributed to gains with shares soaring 5.54% and 3.87% respectively, while copper producers Xstrata and Kazakhmys increased 5.66% and 6.57%.

Elsewhere, U.S. equity markets pointed to a sharply higher open. The Dow Jones Industrial Average futures pointed to a rise of 1.34%, S&P 500 futures signaled a 1.52% jump, while the Nasdaq 100 futures indicated a surge of 1.60%.

Later in the day, the U.S. was to publish preliminary data on third quarter GDP, as well as the GDP price index, the broadest measure of inflation. The country was also to publish its weekly data on initial jobless claims.