Europes Stocks Soar Higher

The Real World News Independent True Unbiased Alternative Truthful Press Media Truth Sources Resources | LONDON — European stock markets advanced Wednesday, recovering some of the week’s heavy losses, as strong data from Germany helped offset continuing sovereign-debt fears. The Stoxx Europe 600 Index /quotes/comstock/22c!sxxp (ST:STOXX600 267.45, +1.16, +0.44%) gained 1% to 266.29 after heavy selling in the previous two sessions.

The German DAX 30 index /quotes/comstock/30p!dax (DX:DAX 6,842, +18.07, +0.27%) rose 1.8% to 6,8023.80 after the Ifo Institute’s closely watched business-climate index rose to its highest level since the nation was reunified. See story on the Ifo gauge.

European markets also extended their gains following U.S. data which showed rising consumer spending and a bigger-than-expected fall in unemployment claims. The well-received figures helped the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 11,187, +150.91, +1.37%)  climb more than 1% in late morning Wall Street trading.

Most other European indexes were higher Wednesday. The U.K.’s FTSE 100 /quotes/comstock/23i!i:ukx (UK:UKX 5,683, +25.49, +0.45%)  closed up 1.4% to 5,657.10, and the French CAC 40 /quotes/comstock/30t!i:px1 (FR:PX1 3,753, +5.66, +0.15%)  rose 0.6% to 3,747.61.

The Irish ISEQ index gained 0.5% as the government spelled out the details of its 15 billion euro austerity plan.

The highly volatile shares of Bank of Ireland /quotes/comstock/30b!bir (IE:BIR 0.29, +0.02, +8.27%)   /quotes/comstock/13*!ire/quotes/nls/ire (IRE 1.58, -0.12, -7.06%)  slumped 11% on reports that the Irish government will take a majority stake in the lender as part of a bailout package for the country. Read more on Ireland.

Oliver Gilvarry, an analyst at Dolmen Stockbrokers, said Irish authorities want to push banks’ capital ratios as high as 12%, compared with the current requirement of 8%. If all the capital is supplied by the state, then the government’s holding in Bank of Ireland will be about 78%. For AIB, which is already largely government-controlled, state ownership could hit 99.9%.

“Uncertainty will continue in the coming days until the final details of the bank deal are announced, which we expect to be at the weekend,” Gilvarry said in a note to clients.

Among other countries with lingering sovereign-debt worries, Portugal’s PSI 20 index and Spain’s IBEX 35 each rose 0.5%. Public and private-sector workers joined a general strike in Portugal on Wednesday to protest austerity measures.

Considering all the bad news on Ireland and Portugal, equity markets are taking events very calmly, said Justin Urquhart Stewart, co-founder of Seven Investment Management.

He said good earnings from many companies have “given people a reason to commit more money,” but he warned that growth prospects look weak due to a slow recovery in the U.S. and a likely slowdown in China.

The underlying problems in peripheral markets also haven’t gone away, he added.

“Is there going to be a default? Yes, of course there is. But they won’t call it a default, it will be a restructuring, or an adjustment,” he added.

Among other stocks on the move, shares of SAP AG /quotes/comstock/11e!fsap (DE:SAP 36.05, -0.02, -0.04%)  slipped 1% after news that Oracle Corp. /quotes/comstock/15*!orcl/quotes/nls/orcl (ORCL 27.74, +0.55, +2.02%)  won a $1.3 billion verdict against the German software firm in an intellectual-property trial. Read about the SAP verdict.

Compass Group /quotes/comstock/23s!a:cpg (UK:CPG 564.00, -2.00, -0.35%)  rallied 7.3% after the U.K. food-service company lifted its dividend payout by a third.

Miners Xstrata /quotes/comstock/23s!a:xta (UK:XTA 1,345, +21.00, +1.59%)  and Kazakhmys /quotes/comstock/23s!e:kaz (UK:KAZ 1,459, +10.00, +0.69%)  both rose over 4% as the sector found support after recent heavy selling.

Capital Shopping Centres Group /quotes/comstock/23s!e:cscg (UK:CSCG 368.10, +30.70, +9.10%)  dropped 5.1% after it said it’s in talks to buy the Trafford Centre shopping mall in a deal worth around 1.6 billion pounds ($2.5 billion).

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