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Markets react positively to Merkel/Sarkozy promise of Euro zone plan

Monday, October 10th 2011 - 22:40 UTC
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Desperate for encouraging news, shares in the EU and US reacted accordingly Desperate for encouraging news, shares in the EU and US reacted accordingly

Stocks rose sharply in Europe and in the US on Monday as investor sentiment were buoyed by a renewed pledge by France and Germany to come up with a plan to tackle the Euro zone debt crisis by month's end. International pressure has been building for bold steps from Europe to avert a global economic backlash.

In a move that could pressure other Euro zone governments to strengthen their banks, Franco-Belgian lender Dexia agreed to nationalize its Belgian banking division and secured state guarantees in a rescue.

The Dow Jones industrial average jumped 205.41 points, or 1.85%, to 11,308.53. The Standard & Poor's 500 Index rose 24.21 points, or 2.10%, to 1,179.67. The Nasdaq Composite Index climbed 44.89 points, or 1.81%, to 2,524.24.

The benchmark S&P 500 climbed above its 50-day moving average of 1,175.61 for the first time since late July, a level seen by analysts as a key resistance point.

Earlier in the day European stocks also increased on the renewed pledge by French president Nicholas Sarkozy and German Prime Minister Angela Merkel to address the Euro debt situation and support the region's banks.

However, mounting expectation of a wave of recapitalisation in the banking sector as well as Erste Group Bank's warning that it would make a big loss this year prompted investors to book a portion of the recent strong gains made on banking stocks.

The FTS100 was up 1.8%; the German DAX index climbed 3% and the French CAC40. The FTSEurofirst 300 index of top European shares was up 0.8 percent at 954.97 points. The benchmark index has gained nearly 9% since reaching a low last Tuesday.

The index's next resistance levels are at 978.57 points, which represents a high reached on Sept. 1, and 983.41 points, the 50% retracement of the July 22-Sept. 23 nosedive.

On Sunday from Berlin the leaders of Germany and France promised to unveil new measures to solve the Euro zone's debt crisis by the end of the month.

Merkel and Sarkozy said that their goal was to come up with a sustainable answer for Greece's woes, agree how to recapitalise European banks and present a plan for accelerating economic coordination in the euro zone by a G20 summit in Cannes on November 3-4. But they declined to reveal any details of their plan.

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  • Marcos Alejandro

    Markets react positively to Merkel/Sarkozy promise of Euro zone plan
    Yes, except this companies:

    Desire Petroleum 16.62 -1.25 (-6.94%)
    Rockhopper 169.38 -11.25 (-6.22%) R.
    Argos R. 21.00 -0.75 (-3.45%)

    Investor comment:
    “Then the usual AIM mugging started and we now sit at 169p. Continually marked down, day on day on day. Down 11p or 6% today with no news or information.. AIM is a yuking joke and no wonder investors have walked away from this casino trading platform.

    We will be lucky to get back to 200p when more oil gets reported. Think hard before investing any future hard earned cash in this AIM mugging platform. IMHO AIM is no longer an investment platform but a milking machine”

    Oct 10th, 2011 - 11:34 pm 0
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