Credit Agricole helps European stocks rise

[November 11, 2009]  LONDON (AP) -- European stock markets rose Wednesday, helped by strong earnings from French bank Credit Agricole SA and a surprise increase in British employment levels.

The euro meanwhile was pushing back up towards 15-month highs against the dollar while the pound slid over a cent and a half after Bank of England governor Mervyn King said a fall in the value of the currency was necessary to rebalance the British economy.

In Europe, the FTSE 100 index of leading British shares was up 54.51 points, or 1 percent, at 5,285.06 while Germany's DAX rose 74.38 points, or 1.3 percent, to 5,687.58. The CAC-40 in France was 48.87 points, or 1.3 percent, higher at 3,834.36.

Sentiment was buoyed by better than expected third quarter results from Credit Agricole. Its shares were up nearly 6 percent, making it the top riser on the CAC-40. Other banks rose in its slipstream, including Societe Generale SA.

Meanwhile, British labor market figures showed that employment actually increased in the three months to September, the first rise since May 2008 -- an increase in the available workforce, as graduates joined the labor market, also pushed unemployment up, however.

"The markets are seeing the data in a positive light and will bolster hopes that the UK economy, which has been lagging behind the major economies in terms of economic growth, might be stabilizing and slowly moving out of recession," said Neil Mackinnon, global macro strategist at VTB Capital in London.

The latest quarterly economic projections from the Bank of England did little to alter the underlying stock market sentiment. Though the central bank raised its growth forecasts, it did not alter the prevailing view that interest rates in Britain will remain at very low levels for a while to come.

There was much more of an impact on the pound, which fell sharply after King said a drop in the currency would help support Britain's export-led recovery. Following his comment, the pound fell from a high of $1.6770 to $1.6640.

Stocks around the world have enjoyed a strong first half to the week after finance ministers from the Group of 20 rich and developing countries indicated that borrowing costs would remain low for a while yet.

As a result, the Dow Jones industrial average has struck new highs for 2009.

Analysts said much could well depend on whether the S&P 500 -- widely considered to be a better barometer of investor appetite than the Dow -- can breach its October high of 1,097.

As a result, investors will be looking at earnings reports from a host of U.S. retailers this week, including Wal-Mart Stores Inc., Abercrombie & Fitch Co., Macy's Inc. and JC Penney Inc. Without the help of the consumer, which accounts for around for 70 percent of the U.S. economy, any global economic recovery will be modest.

Wall Street was poised for a solid opening later, though trading was likely to be light, with government debt markets closed for Veterans Day. Dow futures were up 66 points, or 0.7 percent, at 10,283 while the broader Standard & Poor's 500 futures rose 7.8 points, or 0.7 percent, to 1,099.70.

Earlier in Asia, Japan's Nikkei stock average was higher in the morning before closing virtually unchanged at 9,871.68 while Hong Kong's Hang Seng rose 1.6 percent to 22,627.21.

Elsewhere, South Korea's market added 0.8 percent, with markets in Australia, Taiwan and Singapore also gaining.

China's Shanghai index fell after eight days of gains, losing 0.1 percent to 3,175.19 despite figures showing that the slump in exports was easing.

Oil prices rose modestly back towards $80 a barrel. Benchmark crude for December delivery was up 39 cents at $79.44 a barrel. The contract fell 38 cents to settle at $79.05 on Tuesday.

The dollar was 0.1 percent higher at 89.91 yen while the euro rose 0.3 percent to $1.5036.

Aside from the pound, the focus in the currency markets is on whether the euro can push back up above its 15-month high of $1.5061.

[Associated Press; By PAN PYLAS]

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