By Sara Sjolin, MarketWatch
LONDON (MarketWatch)--European stock markets rose sharply
Monday, as investors welcomed signs of progress in U.S. debt
negotiations after top politicians appeared optimistic over
prospects for a deal to avert the so-called fiscal cliff.
The Stoxx Europe 600 index jumped 2.2% to close at 268.58,
marking the best daily performance since Sept. 6--the day European
Central Bank President Mario Draghi unveiled details of an
unlimited bond-buying program.
"We have had a significant number of weak days and the markets
were quite oversold. There is a perception that progress has been
made in fiscal-cliff negotiations," said Neil Wilkinson, senior
fund manager at Royal London Asset Management.
"The U.S. market was very strong [Friday], and we're playing
catch-up in Europe," he said.
Among notable movers in the index, shares of Nokia Corp. (NOK)
surged 9% on reports that supplies of the Lumia 920, the handset
maker's flagship smartphone, have sold out in Germany.
Shares of Barclays PLC (BCS) jumped 6.6%, as Goldman Sachs
lifted its rating on the U.K. bank to buy from neutral.
However, Fugro NV shares tanked 14%, after the firm said late
Friday that Arnold Steenbakker will step down as chairman of the
board of management due to a difference of opinion.
Outside the main benchmark index, shares of SAS AB soared 23%,
after most of the Scandinavian airline's employees accepted its
major cost-savings plan.
Debt in Greece
Greece remained in the spotlight as the Eurogroup of euro-zone
finance ministers prepared to meet for the second time in two weeks
to discuss the release of a long-delayed tranche of bailout money
and future debt sustainability.
After a meeting last week, Eurogroup chair Jean-Claude Juncker
and International Monetary Fund chief Christine Lagarde clashed
over how to reduce Greece's growing debt pile, with Lagarde arguing
against the euro zone's call to give Greece two additional
years--until 2022--to cut its debt load to 120% of gross domestic
product.
"The euro zone really needs to stop tiptoeing around the issue.
The question is: 'Do we want to keep Greece inside the euro tent?'
" said Stephen Pope, managing partner at Spotlight Ideas, in a
note.
"If the answer is yes, the leaders have to get a hard-core
number on what that will cost--clearly another deep if not total
write-down of Greek outstanding debt. If that price is too high to
pay--do the right thing, cut Greece off," he said.
Fiscal-cliff talks
Investors also looked to the U.S., where signs indicated policy
makers might be getting closer to an agreement to avoid hundreds of
billions in automatic spending cuts and tax hikes slated to take
effect Jan. 1, referred to as the fiscal cliff.
During an overseas trip to Asia, President Barack Obama said
Sunday he's confident "we can get our fiscal situation dealt with."
Separately, House Minority Leader Nancy Pelosi said any deal must
include tax-rate hikes for the wealthy.
Republicans, meanwhile, expressed some willingness to consider
new revenue, but they didn't endorse changes in tax rates for the
rich. .
Concerns that Democrats and Republicans would fail to make a
deal in time hamstrung European investors last week, sending the
Stoxx Europe 600 to its lowest level since early August.
Wall Street benchmarks, however, closed higher on Friday, after
both sides viewed the opening round of negotiations as
constructive. And U.S. stocks rallied out of the box Monday.
Monday movers
Risk-sensitive sectors such as banking and resource shares
ranked among Monday's major gainers in Europe.
In Germany, shares of Commerzbank AG rallied 5.2% as Deutsche
Bank AG (DB) added 4.7%.
The DAX 30 index closed 2.5% higher at 7,123.84.
And among French banks, shares of Credit Agricole SA jumped
5.2%, while Société Générale SA rose 5.5%.
The CAC 40 index rallied 2.9% to 3,439.58.
Banks were also on the rise in the U.K., with shares of HSBC
Holdings PLC (HBC) gaining 3.8%, as the bank said it is in talks to
sell its stake in China's second-largest insurance firm.
Shares of oil major BP PLC (BP) added 3.6%. The Sunday Times
reported that BP's planning to spend as much as 3.7 billion pounds
($5.9 billion) to buy back its own stock to revive its share price;
a company representative declined to comment.
Also higher, Royal Dutch Shell PLC shares (RDSB) picked up 1.8%,
tracking oil prices higher above $89 a barrel in New York.
The FTSE 100 index gained 2.4% to 5,737.66 in London.
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