Shares soar on eurozone deal hopes
Friday 21 October 2011
Shares in London soared higher on hopes that politicians could hammer out a deal to ease the eurozone debt crisis by next week.
A Sunday deadline for decisive action is now unlikely to be met, but traders gambled that a second meeting of European leaders next week will deliver radical measures to shore up the region's financial system.
The FTSE 100 index jumped by almost 2% or 103 points to 5488.6, its highest closing level since early August.
Other European stock markets also rose strongly with the CAC 40 in France and the Dax in Germany rising by 2% and 3% respectively.
European financial ministers are meeting this weekend and possibly again next week. Talk of disagreement between France and Germany over terms of any plan had spooked investors but the mood changed today after reports the two countries are close to agreement on a plan to be tabled at the meetings.
That could involve an expansion of the 440 billion euro (£383.9 billion) eurozone bailout fund to well over one trillion euro to give it more firepower to lend to struggling economies and help restore confidence in banks.
Banks were among the biggest risers in London, with taxpayer-backed Lloyds and Royal Bank of Scotland up 4% and 3% respectively and Barclays gaining 6%.
Yusuf Heusen, sales trader at IG Index, said: "The market is holding quite resolutely around the 5,400 level, when arguably there could have been a strong case for simply pulling money off the table, given the uncertainty that seems to lie ahead."
But he warned that current market rises could be the "calm before the storm" because more falls are on the cards if the markets are not satisfied that any new measures will be sufficient to deal with the crisis.
Markets have fluctuated wildly in recent months amid fears that Greece and possibly other eurozone nations could default on their debts, which could trigger another banking crash and tip the world economy back into recession.
The problem has been made worse as economic growth slowed across Europe, making it harder for countries to keep up with their debt repayments and heightening fears of a default.
This weekend's meeting, which had already been delayed by a week, was initially expected to draw up comprehensive measures to solve the problem and finally restore confidence to the markets.
- 1 Boston Marathon runner's search for mystery man she kissed ends with letter from his wife
- 3 Frankie Boyle on Scottish independence: 'In the Interests of Unity, F**k Off'
- 4 How to gain confidence and maximise your sexual potential
- 5 Chinese theme park sets up 'death simulator' where volunteers can experience being cremated
Saudi Arabia's King Salman sacks senior aide for 'slapping' a journalist behind him live on TV
Boston Marathon runner's search for mystery man she kissed ends with letter from his wife
Frankie Boyle on Scottish independence: 'In the Interests of Unity, F**k Off'
Italian police 'reveal' what Jesus looked like as a young boy
Florida couple forced to register as sex offenders for having sex on public beach
In defence of liberal democracy
General Election 2015: Post-election 'shambles' looms as 70 per cent of voters say SNP 'should not be able to veto UK government policies'
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
General election live: SNP suspends two members for disrupting Labour rally
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
£45000 - £50000 per annum: Ashdown Group: IT Project Coordinator (Software Dev...
£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
£40000 - £48000 per annum + bonus + benefits: Ashdown Group: International Acc...