Stocks remain buoyant as European debt deal expected despite delay

By Pan Pylas, The Associated Press
LONDON – Markets were in a resilient mood Friday, remaining hopeful that Europe will come up with a comprehensive plan to deal with its crippling debt crisis, albeit a few days later than initially thought.
Europe’s main stock markets all opened higher despite the surprise news Thursday that a European debt deal won’t be clinched in time for a summit on Sunday. Germany and France said a second meeting will take place by Wednesday at the latest.
Sunday’s summit was supposed to deliver a comprehensive plan to finally get a grip on the currency union’s debt troubles by detailing new financing for debt-ridden Greece. It also was supposed to produce plans to make Europe’s banks fit to sustain worsening market turbulence and further empower the eurozone bailout fund.
It seems that Europe’s two biggest economies are at loggerheads over how to make best use of the bailout fund, the so-called European Financial Stability Facility, or EFSF. While France is proposing to turn into a bank, which would have access to unlimited credit from the European Central Bank, Germany appears reluctant to sanction such a move.
“The news of a delay in the announcement of a deal on resolving certain aspects of the eurozone debt crisis failed to dent confidence,” said Derek Halpenny, an analyst at the Bank of Tokyo-Mitsubishi UFJ.
However, he said the risks remain for assets such as stocks and the euro, as the delay “highlights the difficulties Europe is having in reaching a final resolution to the crisis.”
Traders will continue to monitor all talk surrounding a meeting of the eurozone’s 17 finance ministers later Friday in Brussels, ahead of the arrival of their leaders over the weekend.
For now though, stocks and the euro are holding their own, as they have largely done so over the past few weeks. Stocks have recovered a chunk of their losses for the year as investors became confident that the 17 countries that use the euro were preparing the three-pronged solution to the debt crisis.
In Europe, Germany’s DAX rose 0.7 per cent to 5,806 while the CAC-40 in France rose 1 per cent to 3,115. The FTSE 100 index of leading British shares was 0.8 per cent higher at 5,428.
The euro was also trading solidly despite the debt deal delay, up 0.1 per cent at $1.3778.
Wall Street was also poised for further gains — Dow futures rose 0.5 per cent to 11,524 while the broader Standard & Poor’s 500 futures rose by the same rate to 1,215.
Earlier, Asian gains were muted after a sluggish start of the trading day.
Japan’s Nikkei 225 index closed little changed at 8,678.89 while Hong Kong’s Hang Seng added 0.2 per cent to 18,025.72.
Mainland Chinese shares lost ground, with the benchmark Shanghai Composite Index falling 0.6 per cent to 2,317.28, its lowest close in 31 months. The Shenzhen Composite Index lost 1.6 per cent to 959.12.
In the oil markets, prices were steady. Benchmark crude for December delivery was up 7 cents at $86.17 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 22 cents to settle at $86.07 in New York on Thursday.

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