European stock markets closed 8/6/2012

European stock markets closed 8/6/2012 : European stocks closed solidly higher Monday, as the prospect for action by the European Central Bank to stem the long running euro zone debt crisis lifted the financial sector, while strong gains in the auto sector also lent support.

At the close of European trade, the EURO STOXX 50 was up 1.13%, France’s CAC 40 climbed 0.81%, while Germany’s DAX 30 gained 0.77%.

Helping ignite the bullish rally, the ECB indicated last week that it may restart its bond buying program, to help lower Spanish and Italian borrowing costs.

However traders remained wary amid concerns over how effective the ECB’s new bond buying program would be, in the light of differences from the bank’s existing scheme.

ECB head Mario Draghi also said any such action was conditional on euro zone governments experiencing difficulty on bond markets applying to the bloc’s bailout funds to purchase government bonds and accepting strict conditions and supervision.

Renewed concerns that Spain may yet request a full-scale sovereign bailout kept the yield on the country’s 10-year bonds hovering close to the critical 7% threshold widely seen as unsustainable if a country is to remain solvent.

Meanwhile, data on Friday showing an unexpected increase in the U.S. unemployment rate last month fuelled expectations for another round of quantitative easing from the Federal Reserve.

The U.S. Department of Labor said the economy added 163,000 jobs in July, the biggest increase since February and outstripping expectations for an increase of 100,000.

However, the U.S. unemployment rate unexpectedly ticked up to 8.3%, from 8.2% in the preceding month, keeping alive speculation over the possibility of further monetary stimulus.

Lifting the Dax, shares of automaker BMW were up 2.6%, while Volkswagen and Daimler rallied 1.80% and 2.59% respectively.

Meanwhile, shares of German insurance giant Allianz jumped 1.81%. On Friday, the company said net profit rose more than 23% in the second quarter, to reach EUR1.3 billion, boosted partly by its life and health divisions.

The auto sector was also leading gains in France, with shares in Renault rising 2.44%, and shares of Peugeot up 3.87%, helping the CAC40 index erase earlier losses.

Financial stocks were also sharply higher, with shares in France's Societe Generale and BNP Paribas up 1.94% and 4.41% respectively.

For the latest updates on the stock market, PRESS CTR + D or visit Stock Market Today For the latest updates PRESS CTR + D or visit Stock Market news Today

Related Post: