While you were sleeping: Germany backs bailout, US jobless claims fall

Friday 30th September 2011

Germany's lower house of parliament overwhelmingly approved an expansion to Europe's bailout fund, allowing progress on efforts to help Greece avoid default.

The Bundestag voted to almost double Germany's guarantees to the European Financial Stability Facility to 211 billion euros, a move that still has to be voted in the upper house.

Stocks rose across Europe and the euro strengthened against the U.S. dollar on hopes that the region will manage to quarantine the sovereign debt crisis that has threatened to engulf the region and risk triggering as global recession.

The Stoxx Europe 600 Index rose 0.7%, Germany's DAX 30 and France's CAC 40 both climbed 1.1% and banks rose.

Commerzbank gained 4.7%, Deutsche Bank rose 3.9%, Societe Generale gained 5.8% and BNP Paribas rose 5%.

The euro rose 0.3% to $1.3565 and gained 0.4% to 103.98 yen amid optimism Europe will manage to tackle its crisis.

European equity markets were also buoyed by better U.S. economic data. Claims for jobless benefits fell by 37,000 to 391,000 last week, according to the Labor Department, beating market estimates of 420,000.

Separately, U.S. second-quarter gross domestic product growth was revised up to 1.3% from an initial estimate of 1%. "Markets are cautiously optimistic, but the euro problems are far from resolved," Marc Chandler, global head of currency strategy at Brown Brothers Harriman, told Bloomberg. "People are inching their way back into risk."

Stocks on Wall Street pared earlier gains in late trading as tech companies fell. The Dow Jones Industrial Average up 0.1% to 11023.88 and the Standard & Poor's 500 Index fell 0.6% to 1143.85. Advanced Micro Devices tumbled 15%, leading the S&P 500 lower, after the computer chipmaker lowered its forecasts for sales and earnings in the third quarter. Deutsche Bank cut its price target for the computer chip maker.

Crude oil for November delivery rose 2% to US$82.79 a barrel on the New York Mercantile Exchange, clawing back much of the previous session's losses after the U.S. economic data and European progress stoked optimism that demand for fuel will increase.

Gold for December delivery was little changed at about US$1,616 an ounce.

The New Zealand dollar fell after Fitch Ratings lowered the nation's credit rating by one notch to AA, saying the country would struggle to rein in its yawning current account deficit in coming years.

Facebook's new Ticker and Timeline features are to face scrutiny after Electronic Privacy Information Center, an online privacy lobby group, asked the U.S. Federal Trade Commission to look at how the company tracks users.

The London Metal Exchange has received more than 10 expressions of interest in acquiring the 134 year-old market, chief executive Martin Abbott told Bloomberg. It may recommend a bid as soon as March. Owners include Goldman Sachs, UBS and JPMorgan Chase & Co.

(BusinessDesk)

BusinessDesk.co.nz

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