Open

Coming up

Don't miss

Replay


LATEST SHOWS

DEBATE

Europe's Plan for Putin - Will Russian Leader Bend After New Sanctions?

Read more

FOCUS

Pakistan's Ahmadis living in fear of extremist attacks

Read more

WEB NEWS

Web users show solidarity with Iraqi Christians

Read more

THE INTERVIEW

Gilles Kepel, Islamic and Arab world specialist

Read more

BUSINESS DAILY

Argentina braced for another debt default

Read more

DEBATE

Too Late for Sanctions? Pressure Mounts on Russia over Ukraine (part 2)

Read more

DEBATE

Too Late for Sanctions? Pressure Mounts on Russia over Ukraine

Read more

MEDIAWATCH

'What would you do?'

Read more

AFRICA NEWS

Ebola virus: Liberia shuts most border points

Read more

  • Graphic: Ebola spreads across West Africa

    Read more

  • In pictures: ن - a sign of support for Iraq’s persecuted Christians

    Read more

  • Scores killed as Israel ramps up Gaza bombardment

    Read more

  • US and EU broaden Russia sanctions over Ukraine

    Read more

  • Calls mount to ban France’s ‘violent’ Jewish Defence League

    Read more

  • Venezuela: Hugo Chavez’s ‘little bird’ strikes again

    Read more

  • France extradites suspected Jewish Museum shooter to Belgium

    Read more

  • Video: How tourism is helping Rwanda’s gorillas, ex-poachers

    Read more

  • Rare Sri Lankan leopard cubs born in French zoo

    Read more

  • France evacuates its nationals from Libya

    Read more

  • US says Russia violated arms treaty by testing cruise missile

    Read more

  • Argentina in last-ditch effort to avert default

    Read more

  • Karzai’s cousin killed in Afghan suicide attack

    Read more

  • Libya oil tanker fire blazes out of control

    Read more

  • In pictures: From Gaza to Mosul, bittersweet end of Ramadan for Muslims

    Read more

  • Moroccan police arrest French al Qaeda recruiter

    Read more

Business

World stocks make gains before close after euro aid deal

Video by Luke SHRAGO

Text by News Wires

Latest update : 2010-05-11

World markets closed with solid gains on Monday after the European Union and the International Monetary Fund agreed to a nearly $1 trillion rescue package for the eurozone to help prevent the spread of the Greek debt crisis.

AFP - US stocks rebounded strongly Monday, with the blue-chip Dow index closing up nearly four percent after the EU and IMF agreed a near one-trillion-dollar rescue package for the eurozone, stemming a crisis that threatened to derail the global economic recovery.
   
The Dow Jones Industrial Average jumped 404.71 points (3.90 percent) to 10,785.14 in final trades following a turbulent week for Wall Street that saw the index plummet almost 1,000 points briefly on Thursday.
   
The tech-studded Nasdaq composite shot up 109.03 points (4.81 percent) to 2,374.67, while the broad-market Standard & Poor's 500 index climbed 48.84 points (4.40 percent) to a provisional close of 1,159.72.

Many European markets posted record single-day gains, among them Spain, Portugal and Italy which investors last week left reeling amid concerns these countries could fall by the debt wayside like Greece.
   
The euro too rose very sharply early Monday but by late afternoon the unit was slipping back as players took profits and waited to see if the eurozone nations would really stick by the currency's fiscal rules this time around.
   
Analysts said the deal buys the time to put public finances in order but eurozone states now have to deliver or it could unravel dangerously, threatening an even worse crisis that could plunge the global economy back into recession.
   
In London, the benchmark FTSE 100 index of leading shares jumped 5.16 percent, in Paris the CAC 40 soared 9.66 percent and in Frankfurt the DAX gained 5.30 percent.
   
Milan was up 11.28 percent, Madrid 14.43 percent and Lisbon 10.73 percent, all record daily gains.
   
Meanwhile in Greece, the epicentre for the debt and budget crisis which has brought the eurozone to its knees, stocks raced to gains of 9.13 percent.
   
The interest rate earned on benchmark Greek 10-year bonds nearly halved on news of the deal, tumbling from punitive levels of above 12 percent on Friday to 6.717 percent late Monday -- still very high but a massive change for a market which usually moves in tiny, incremental steps.
   
On Wall Street, the blue-chip Dow Jones Industrial Average gained about four percent by around 1600 GMT after turbulence last week that saw the index plummet almost 1,000 points or nine percent briefly on Thursday.
   
Dealers said the European Union and International Monetary Fund deal worth 750 billion euros agreed early Monday to resolve the debt and budget deficit crisis in Europe provided a clear lead after months of uncertainty.
   
Following the announcement the US Federal Reserve, the European Central Bank and central banks in Japan, Britain, Canada and Switzerland said they would intervene to ensure there was plenty of liquidity on the money markets.
   
"Time will tell if this coordinated action is successful. For now, it is spurring a massive relief trade based on the notion that it might just be the answer," said Patrick O'Hare, analyst at Briefing.com.
   
"Anyway, while there is a sense of relief in the market about the monetary force being applied, there will be a fiscal price to pay for this bailout for those who need it," he cautioned.
   
Analysts at Charles Schwab & Co. said the rescue package on top of a 110-billion-euro EU-IMF bailout for Greece eased eurozone debt contagion fears and preserved the outlook for the continuation of the global recovery.
   
"Equity markets certainly started the week with a flourish, although after an abysmal end to last week and the release of news regarding a robust bailout package ... it's hardly a surprise that the major indices have all posted sizable gains," said Anthony Grech, head of research at traders IG Index.
   
The euro rebounded above 1.30 dollars in early trade from 1.2755 dollars in New York late Friday but slipped back steadily in the afternoon to 1.2861 dollars.
   
Dealers said the forex markets wanted to see what the follow up to the EU-IMF package would be, it being essential for the euro that governments stick to the eurozone's fiscal rules and get their debt and deficits back under control quickly.
   
Markets last week suffered huge sell-offs amid uncertainty over whether Greece could implement deeply unpopular austerity measures and stave off bankruptcy.
   
Fears that a possible debt default by Greece could hit the world's financial system in the same way the collapse of US investment banking giant Lehman Brothers did two years ago had sent shares and the euro plunging.
   
Concerns had also mounted that the Greek rescue deal would fail to shield Spain and Portugal from crippling market pressures, sending the euro down at one point to 1.2523 dollars in New York, its lowest since March 2009.
   
Asian markets also hailed the EU deal, with Tokyo stocks closing up 1.60 percent, Hong Kong jumping 2.54 percent and Sydney rising 2.66 percent.

 

Date created : 2010-05-10

  • MARKETS

    Euro surges in Asia after EU bailout agreement reached

    Read more

  • GREECE

    EU approves 110-billion-euro bailout package

    Read more

  • GREECE

    IMF approves 30 billion euro rescue loan for Greece

    Read more

COMMENT(S)