LONDON: Global equities advanced on Tuesday, Dec 7, boosted by a compromise deal to extend expiring U.S. tax cuts, while the euro rose on optimism that Irish lawmakers will pass its toughest ever budget later in the day.
Copper prices gained, supported by Chinese buying and a firmer euro, and oil prices rose to a fresh 26-month high on the back of extra demand for heating fuel in parts of Europe and the United States.
The single currency, however, remained vulnerable, with European policymakers dithering over how to tackle the region's debt problem.
U.S. President Barack Obama unveiled a deal late on Monday to renew tax cuts not just for the middle class but for also wealthier Americans, as Republicans wanted.
The announcement was welcomed by the markets, with U.S. stock index futures trading 0.7 to 1 percent higher and global stocks measured by MSCI All-Country World Index adding 0.6 percent. "The market is benefiting from the compromise in the U.S. on the extension of the Bush tax cuts and to a lesser extent from the probable voting (through) of the Irish (budget)," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets.
Europe's FTSEurofirst 300 index rose 1.2 percent and shares in euro zone peripheral economies also gained sharply.
The Irish benchmark advanced 1.5 percent, as Prime Minister Brian Cowen is expected to get his fiscal plan through parliament and avert the risk of a snap election.. Last month, Dublin accepted an 85 billion euro international bailout package.
The euro was up 0.4 percent at $1.3359.
"The euro is gaining support on optimism that the Irish budget will be passed but I expect any rallies to be fleeting. Structural weaknesses in the euro zone remain in place," said Lee Hardman, currency analyst at BTM-UFJ.
''
EURO ZONE ON WATCH
The single currency region's policymakers have yet to show financial markets that they can decisively resolve its debt problem. Concerns remain that the debt crisis could spread from Greece and Ireland to Portugal and possibly Spain.
After a five-hour meeting, the bloc's finance ministers said late on Monday they would be taking no new steps to tackle the contagion, saying an existing emergency fund was sufficiently big and that a proposal to issue euro zone bonds had not even been broached.
German Chancellor Angela Merkel, speaking in Berlin, rebuffed calls for a bigger financial safety net or joint euro bonds.
Yields on sovereign bonds issued by euro zone peripheral countries were mixed. Ireland's 10-year bond yields over benchmark German Bunds eased 3 basis points to 563 bps, while those on Spanish 10-year bonds rose 7 bps to 241 bps.
The cost of protection against an Irish debt default narrowed 8 bps to 520 bps, while Spain's protection cost rose 2 bps to 319 bps.
Dealers said trade in the bonds was very thin.
"My gut feeling is that spreads are going to carry on widening for a while yet," said Chris Scicluna, deputy head of economic research at Daiwa Capital Markets.
"Anyone in the market who is expecting someone, somewhere to fund more support for the periphery, whether it be the EFSF or the ECB -- they're going to be disappointed."
The dollar was steady at 82.65 yen after slipping to a three-week low against the Japanese currency earlier in the session. The renewed strength in the yen dragged Japan's Nikkei 225 down 0.3 percent.
A Reuters poll showed the mood among Japanese manufacturers darkened in late November and is expected to grow even gloomier in the coming months as a strong yen and the global slowdown eat into profits.
In the commodity market, copper rose 2.4 percent, while oil prices gained 0.8 percent to trade above $90 a barrel. - Reuters
Copper prices gained, supported by Chinese buying and a firmer euro, and oil prices rose to a fresh 26-month high on the back of extra demand for heating fuel in parts of Europe and the United States.
The single currency, however, remained vulnerable, with European policymakers dithering over how to tackle the region's debt problem.
U.S. President Barack Obama unveiled a deal late on Monday to renew tax cuts not just for the middle class but for also wealthier Americans, as Republicans wanted.
The announcement was welcomed by the markets, with U.S. stock index futures trading 0.7 to 1 percent higher and global stocks measured by MSCI All-Country World Index adding 0.6 percent. "The market is benefiting from the compromise in the U.S. on the extension of the Bush tax cuts and to a lesser extent from the probable voting (through) of the Irish (budget)," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets.
Europe's FTSEurofirst 300 index rose 1.2 percent and shares in euro zone peripheral economies also gained sharply.
The Irish benchmark advanced 1.5 percent, as Prime Minister Brian Cowen is expected to get his fiscal plan through parliament and avert the risk of a snap election.. Last month, Dublin accepted an 85 billion euro international bailout package.
The euro was up 0.4 percent at $1.3359.
"The euro is gaining support on optimism that the Irish budget will be passed but I expect any rallies to be fleeting. Structural weaknesses in the euro zone remain in place," said Lee Hardman, currency analyst at BTM-UFJ.
''
EURO ZONE ON WATCH
The single currency region's policymakers have yet to show financial markets that they can decisively resolve its debt problem. Concerns remain that the debt crisis could spread from Greece and Ireland to Portugal and possibly Spain.
After a five-hour meeting, the bloc's finance ministers said late on Monday they would be taking no new steps to tackle the contagion, saying an existing emergency fund was sufficiently big and that a proposal to issue euro zone bonds had not even been broached.
German Chancellor Angela Merkel, speaking in Berlin, rebuffed calls for a bigger financial safety net or joint euro bonds.
Yields on sovereign bonds issued by euro zone peripheral countries were mixed. Ireland's 10-year bond yields over benchmark German Bunds eased 3 basis points to 563 bps, while those on Spanish 10-year bonds rose 7 bps to 241 bps.
The cost of protection against an Irish debt default narrowed 8 bps to 520 bps, while Spain's protection cost rose 2 bps to 319 bps.
Dealers said trade in the bonds was very thin.
"My gut feeling is that spreads are going to carry on widening for a while yet," said Chris Scicluna, deputy head of economic research at Daiwa Capital Markets.
"Anyone in the market who is expecting someone, somewhere to fund more support for the periphery, whether it be the EFSF or the ECB -- they're going to be disappointed."
The dollar was steady at 82.65 yen after slipping to a three-week low against the Japanese currency earlier in the session. The renewed strength in the yen dragged Japan's Nikkei 225 down 0.3 percent.
A Reuters poll showed the mood among Japanese manufacturers darkened in late November and is expected to grow even gloomier in the coming months as a strong yen and the global slowdown eat into profits.
In the commodity market, copper rose 2.4 percent, while oil prices gained 0.8 percent to trade above $90 a barrel. - Reuters
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