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Europe stocks turn higher ahead of US debt deal.

Customers shop for Danone's Dumex brand of infant baby formula at a store in Beijing (file). Shares in food group Danone fell by 2.28% yesterday in response to figures for the cost of a food recall in Asia. AFP/London European stock markets broke into gains yesterday, on expectations that US lawmakers would avoid a disastrous default just hours ahead of a deadline. After the European markets closed US lawmakers finally struck a deal aimed at avoiding a default of its debt.

Sentiment was rattled early in the session as ratings agency Fitch placed the US on warning for a downgrade from its top-level A assessment.

But at close in Europe, Frankfurt's DAX 30 climbed 0.47% to set a new record close at 8,846.0 points.

London's benchmark FTSE 100 index added 0.34% to 6,571.59 points, while the CAC 40 in Paris rose 0.29% to 4,243.72 points.

"Europe's markets moved sharply from losses to gains, gyrating wildly on news flow from Capitol Hill as the 17th October deadline edges into view," said Michael Hewson, Senior Market Analyst at CMC Markets UK.

The US earlier yesterday stood hours from a fateful fiscal deadline, with a chaotic political standoff threatening to trigger a debt default and rock the global economy.

But late in the trading session, it appeared Republican and Democratic leaders in the US Senate had struck an agreement.

Senate Majority Leader Harry Reid and Mitch McConnell, the top Republican in the senate, led the negotiations to avert a default after an earlier bid collapsed in a bitterly divided House of Representatives.

Wall Street soared on talk of the deal with the Dow Jones Industrial Average up 1.27% in midday trade and the Nasdaq gaining 1.10% The fast-moving developments in Washington sent the European single currency tumbling, falling to $1.3488, compared with $1.3525 late in New York on Tuesday.

Economists had warned that a US default would have had devastating effects on the global economy and on world financial markets.

Fitch had warned it would downgrade the US debt rating from its highest level, citing the possibility the Treasury could default on its obligations.

In France meanwhile, a number of companies saw their shares fall sharply.

Shares in food group Danone fell by 2.28% in response to figures for the cost of a food recall in Asia.

PSA Peugeot Citroen shares fell by 4.43% on weak sales in September, LVMH luxury group stock fell 4.25% on disappointing quarterly sales, and Ubisoft stock plunged 26.15% on a delay in the launch of two new computer games.

Gulf Times Newspaper 2013

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Publication:Gulf Times (Doha, Qatar)
Date:Oct 16, 2013
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