European stocks rally on hopes debt crisis easing

[January 18, 2011]  MILAN (AP) -- European stock markets rallied Tuesday on hopes that eurozone nations are planning to strengthen and broaden their measures to fight the debt crisis.

An influential German survey also gave the markets a boost with news that investor confidence has risen sharply amid hopes that global economic growth will remain robust. Greece, meanwhile, passed another bond market test, raising euro650 million ($865 million) in a heavily oversubscribed auction.

Still, analyst Ben Potter at IG Markets cautioned that "lingering uncertainty over Eurozone debt could well deliver something of a hangover."

Ministers from the 17 euro nations meeting in Brussels discussed boosting the size and powers of the region's bailout fund. Support for stronger action is growing and the bloc is clearly trying to come up with a more comprehensive solution to its crisis, with a final decision expected over the coming months.

The crisis has already forced Greece and Ireland to implement painful budget cuts in exchange for multibillion dollar bailouts. Harsh remedies prescribed by governments have provoked protests and strikes in Portugal, Greece and elsewhere.

The outlook was good in Germany, however, with the ZEW survey noting positive U.S. data has raised hopes of continued worldwide growth. Its confidence index rose to 15.4 points for January, from 4.3 in December.

Britain's FTSE 100 rose 1.0 percent to 6,047.93 while Germany's DAX rose 1.0 percent to 7,146.48 and the CAC-40 in Paris gained 0.9 percent to 4,009.28.

Oil futures hovered below $92 a barrel, largely shrugging off higher demand forecasts from OPEC and the IEA, the oil cartel and the energy agency. In currencies, the dollar was up against the euro at euro1.3385 and lower than the yen, at 82.5.

Wall Street appeared headed for a muted opening after being closed Monday for a holiday. Dow futures were up 0.3 percent to 11,758 and broader S&P 500 futures were up 0.5 percent at 1,289.59.

The market close in Asia was not as bright. Japan's Nikkei 225 stock average closed up 0.2 percent at 10,518.98. Elpida Memory Inc., Japan's biggest semiconductor maker, rose 1.1 percent after the Nikkei financial daily reported company plans to raise prices of chips used in personal computers.

Hong Kong's Hang Seng index fell slightly, less than 3 points, to 24,153.98 while South Korea's Kospi was 0.2 percent lower at 2,096.48.

Australia's S&P/ASX 200 closed 0.8 percent higher at 4,801.80 and Chinese shares edged up as investors awaited Thursday's release of key economic data for the fourth quarter of 2010.

The benchmark Shanghai Composite Index added 0.1 percent to 2,708.98. The Shenzhen Composite Index of China's smaller, second exchange rose 0.3 percent to 1,183.48.

"For now, investors would rather wait until they can clearly see the current economic situation," said Peng Yunliang, an analyst at Shanghai Securities.

Meanwhile, investors across the world were waiting to see how Wall Street reacts to Apple's announcement that CEO Steve Jobs would be taking a medical leave of absence.

The news could hammer the company's shares and overall sentiment when trading opens for the week. The company made the announcement a day before its quarterly earnings report.

In Europe on Monday, investors reacted sharply. Apple shares closed in Frankfurt 6.6 percent lower at 243 euros ($323.02).

But some analysts believe the company can still function successfully without Jobs in the corner office full-time -- even with Apple at the forefront of a new revolution in personal computing.

[Associated Press; By COLLEEN BARRY]

Pamela Sampson in Bangkok and Ji Chen in Shanghai contributed to this report.

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