--European stocks up; decent earnings help the main indexes
--ARM leads gains in London; tech sector storms ahead
--Portuguese 10-year government bond yields remain elevated
--Euro-zone unemployment rate digested
By Michele Maatouk & Andrea Tryphonides
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--European stocks posted strong gains and the euro was higher against the dollar as investors tentatively welcomed the European Union leaders' agreement on a new fiscal pact, to be signed off in March, and a bailout mechanism that will come into force in July, while good earnings also boosted sentiment Tuesday.
However, traders are still wary as Portugal's 10-year government bond yield remained elevated early Tuesday and there was still no agreement between Greece and its private-sector creditors.
Investors are concerned that Portugal may need another bailout or a Greek-style debt-restructuring if it cannot regain access to the capital markets. At 1040 GMT, the Portuguese 10-year government bond yield was at 15.98%, according to Tradeweb.
"One cannot deny that Portugal is now under fire on the financial markets, especially given the recent downgrade of its sovereign debt to junk status by Standard & Poor's," said ING. "The risks are growing that Portugal ultimately could require ESM assistance, possibly to be agreed over the second half of 2012, for likely take-down from 2013. That said this does not mean that Portugal needs a Greek-style PSI deal," said ING.
"Remember that the Greek restructuring brings Greek debt down to 120% of gross domestic product. Portuguese debt is still comfortably below this level, and is likely to remain below in the next coming couple of years even if we discount a deep and persistent recession. So, an elevated second bailout risk, but PSI risk remains low," added ING.
Still, decent earnings, particularly in Europe's technology sector, helped the main stock market indexes higher.
At 1040 GMT, the benchmark Stoxx Europe 600 index was up 0.8% at 254.62. If it holds Tuesday's gains, the index is likely to close the month up by around 4%. London's FTSE 100 was up 0.8% at 5717.86, Frankfurt's DAX was 0.9% higher at 6506.18 and Paris's CAC-40 was 1.2% higher at 3304.14.
At the same time, U.S. stock-index futures pointed to a firmer open on Wall Street, with the Dow Jones Industrial Average front-month futures contract and the S&P 500 futures contract up 0.5% at 12,669.00 and 1315.80, respectively.
In London, ARM Holdings was up 4.6% and leading the blue-chip FTSE 100 index following the company's fourth-quarter results. The results beat market expectations largely due to strong demand for smartphones and tablets and the company said it is on track to meet expectations in the first quarter 2012. The results boosted the Stoxx Europe 600 tech sector, which was up 1.2%.
Also in London, British Sky Broadcasting gained 2.7% following well-received results. BSkyB reported an 8.4% jump in first-half net profit, underpinned by new pay-television and broadband customers. News Corp., which owns Dow Jones & Co. and The Wall Street Journal, holds about a 39% stake in BSkyB.
Elsewhere, steelmaker Thyssenkrupp jumped 1.4% after it came to an agreement to sell its Inoxum stainless steel division to Finland's Outokumpu Oyj. Outokumpu dropped 8.2%.
On the data front, the euro-area unemployment rate for December came in at 10.4%, unchanged from a revised November level and in line with economists' forecasts. ING said the unemployment figures "make for worrying reading," adding, "The only piece of solace is that the pace of increase in unemployment appears to be slowing."
Earlier, most Asian stock markets finished modestly higher Tuesday after the euro zone's move toward a closer fiscal union and positive economic data in Japan.
Japan's Nikkei Stock Average gained 0.1%, Australia's S&P/ASX 200 fell 0.2%, South Korea's Kospi Composite added 0.8%, Hong Kong's Hang Seng Index advanced 1.1%, while China's Shanghai Composite gained 0.3%.
Stronger-than-expected Japanese industrial production data supported the Tokyo market, although the yen's strength continued to hobble exporter stocks.
In foreign exchange markets, hopes that Greek talks on the restructuring of its debt will soon come to some sort of happy conclusion provided broad support for regional risk-sensitive currencies and the euro. There was also some good economic news out of Germany, which helped the euro. Seasonally adjusted unemployment fell in January by 34,000 and the adjusted unemployment rate hit a record low of 6.7%. Experts had expected unemployment to fall by 10,000 in adjusted terms and have an adjusted rate of 6.8% for January.
At 1045 GMT, the single currency was at $1.3186 against the dollar, from $1.3141 late Monday in New York. The dollar was at Y76.34, from Y76.33.
Spot gold was at $1,739.00 per troy ounce, up $10.00 from its New York settlement Monday, bolstered by a stronger euro. March Nymex crude oil futures were up $1.03 at $99.81 per barrel and Brent oil futures were 95 cents higher at $111.70. The March bund contract was down 0.44 at 139.23.
-By Michele Maatouk, Dow Jones Newswires; +44-20-7842-9447; michele.maatouk@dowjones.com
--ARM leads gains in London; tech sector storms ahead
--Portuguese 10-year government bond yields remain elevated
--Euro-zone unemployment rate digested
By Michele Maatouk & Andrea Tryphonides
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--European stocks posted strong gains and the euro was higher against the dollar as investors tentatively welcomed the European Union leaders' agreement on a new fiscal pact, to be signed off in March, and a bailout mechanism that will come into force in July, while good earnings also boosted sentiment Tuesday.
However, traders are still wary as Portugal's 10-year government bond yield remained elevated early Tuesday and there was still no agreement between Greece and its private-sector creditors.
Investors are concerned that Portugal may need another bailout or a Greek-style debt-restructuring if it cannot regain access to the capital markets. At 1040 GMT, the Portuguese 10-year government bond yield was at 15.98%, according to Tradeweb.
"One cannot deny that Portugal is now under fire on the financial markets, especially given the recent downgrade of its sovereign debt to junk status by Standard & Poor's," said ING. "The risks are growing that Portugal ultimately could require ESM assistance, possibly to be agreed over the second half of 2012, for likely take-down from 2013. That said this does not mean that Portugal needs a Greek-style PSI deal," said ING.
"Remember that the Greek restructuring brings Greek debt down to 120% of gross domestic product. Portuguese debt is still comfortably below this level, and is likely to remain below in the next coming couple of years even if we discount a deep and persistent recession. So, an elevated second bailout risk, but PSI risk remains low," added ING.
Still, decent earnings, particularly in Europe's technology sector, helped the main stock market indexes higher.
At 1040 GMT, the benchmark Stoxx Europe 600 index was up 0.8% at 254.62. If it holds Tuesday's gains, the index is likely to close the month up by around 4%. London's FTSE 100 was up 0.8% at 5717.86, Frankfurt's DAX was 0.9% higher at 6506.18 and Paris's CAC-40 was 1.2% higher at 3304.14.
At the same time, U.S. stock-index futures pointed to a firmer open on Wall Street, with the Dow Jones Industrial Average front-month futures contract and the S&P 500 futures contract up 0.5% at 12,669.00 and 1315.80, respectively.
In London, ARM Holdings was up 4.6% and leading the blue-chip FTSE 100 index following the company's fourth-quarter results. The results beat market expectations largely due to strong demand for smartphones and tablets and the company said it is on track to meet expectations in the first quarter 2012. The results boosted the Stoxx Europe 600 tech sector, which was up 1.2%.
Also in London, British Sky Broadcasting gained 2.7% following well-received results. BSkyB reported an 8.4% jump in first-half net profit, underpinned by new pay-television and broadband customers. News Corp., which owns Dow Jones & Co. and The Wall Street Journal, holds about a 39% stake in BSkyB.
Elsewhere, steelmaker Thyssenkrupp jumped 1.4% after it came to an agreement to sell its Inoxum stainless steel division to Finland's Outokumpu Oyj. Outokumpu dropped 8.2%.
On the data front, the euro-area unemployment rate for December came in at 10.4%, unchanged from a revised November level and in line with economists' forecasts. ING said the unemployment figures "make for worrying reading," adding, "The only piece of solace is that the pace of increase in unemployment appears to be slowing."
Earlier, most Asian stock markets finished modestly higher Tuesday after the euro zone's move toward a closer fiscal union and positive economic data in Japan.
Japan's Nikkei Stock Average gained 0.1%, Australia's S&P/ASX 200 fell 0.2%, South Korea's Kospi Composite added 0.8%, Hong Kong's Hang Seng Index advanced 1.1%, while China's Shanghai Composite gained 0.3%.
Stronger-than-expected Japanese industrial production data supported the Tokyo market, although the yen's strength continued to hobble exporter stocks.
In foreign exchange markets, hopes that Greek talks on the restructuring of its debt will soon come to some sort of happy conclusion provided broad support for regional risk-sensitive currencies and the euro. There was also some good economic news out of Germany, which helped the euro. Seasonally adjusted unemployment fell in January by 34,000 and the adjusted unemployment rate hit a record low of 6.7%. Experts had expected unemployment to fall by 10,000 in adjusted terms and have an adjusted rate of 6.8% for January.
At 1045 GMT, the single currency was at $1.3186 against the dollar, from $1.3141 late Monday in New York. The dollar was at Y76.34, from Y76.33.
Spot gold was at $1,739.00 per troy ounce, up $10.00 from its New York settlement Monday, bolstered by a stronger euro. March Nymex crude oil futures were up $1.03 at $99.81 per barrel and Brent oil futures were 95 cents higher at $111.70. The March bund contract was down 0.44 at 139.23.
-By Michele Maatouk, Dow Jones Newswires; +44-20-7842-9447; michele.maatouk@dowjones.com
