UK markets closed higher on Friday, after the Eurozone leaders agreed on a new inter-governmental treaty that would lead to closer fiscal union in the region at the EU summit in Brussels.
Lloyds Banking Group, the top gainer on the FTSE 100 index, jumped 6.5%, while Royal Bank of Scotland and Barclays climbed 5.1% and 5.4%, respectively, after Britain rejected the EU plan.
Banking stocks also rose after the recent stress test results indicated that UK banks were sufficiently capitalized.
Among mining sector stocks, Xstrata, Eurasian Natural Resources and Antofagasta rallied between 2.2% and 3.0%, tracking a rise in base metal prices.
BG Group jumped 1.2%, as Nomura reiterated its “Buy” rating on the stock.
Outsourcing group, Capita rose 1.5%, after it received approval from the Office of Fair Trading to acquire Vertex.
FTSE 100 added 0.8% to settle at 5,529.2, while FTSE 250 edged up 0.4% to close at 10,130.6.
European Trading Review
European markets closed higher on Friday, as the region’s national central banks agreed to lend €200 billion through the IMF to resolve the sovereign debt crisis, and following report that China’s central bank would set up $300 billion of funds to invest overseas.
Financial sector stocks, Credit Agricole, Deutsche Bank and Intesa Sanpaolo, soared between 4.1% and 7.9%, after Goldman Sachs raised its recommendation on the European banks to “Neutral” from “Underweight”.
Carmaker, Daimler, climbed 4.1%, after the company announced that its Mercedes-Benz plants were operating at “near full capacity”.
Peugeot and Fiat rose 3.3% and 4.7%, respectively, after data showed a better-than-expected rise in US consumer confidence in December.
Alcatel surged 7.1%, after a broker upgraded the stock to “Outperform” from “Market perform”.
FTSEurofirst 300 index added 1.3% to 985.8. German DAX Xetra 30 advanced 1.9% to end at 5,986.7. French CAC-40 climbed 2.5% to 3,172.4.
US Trading Review
US markets rallied sharply on Friday, after eurozone leaders agreed to bolster the bailout fund and after data showed that US consumer confidence surged to a six month high, lifting market sentiment.
Caterpillar, the top gainer on the DJIA index, surged 3.3%, while General Electric rose 3.3%, after boosting its quarterly dividend for the fourth time in two years.
Freeport-McMoRan Copper & Gold added 3.6%, after Barclays Capital issued an upbeat note on the stock.
iGate added 3.1%, after a broker initiated coverage on the stock with an “Outperform” rating.
Diamond Foods jumped 52.3%, and emerged as the top riser on the NASDAQ index, after KeyBanc Capital Markets issued an upbeat note on the stock, stating that Diamond Food’s accounting probe would end quickly and without major consequences.
DJIA rose 1.6% to close at 12,184.3. NASDAQ climbed 1.9% to 2,646.9. S&P 500 soared 1.7% to settle at 1,255.2.
Forex Trading Review
At 0400 BST today, the GBP is trading 0.2% lower against the USD at $1.5637, 0.1% higher against the EUR at €1.1716, and 0.2% lower against the JPY at ¥121.39.
The EUR is trading 0.3% lower against the USD at $1.3347.
The EUR is trading 0.3% lower against the JPY at ¥103.62, as Italy and France prepare to sell bills amid concern that the region’s debt crisis is spreading to other economies.
The USD closed higher against most of its major peers, amid speculation that a German report, scheduled to be released, would show that investor confidence in the country slid to a three-year low, boosting demand for safer assets.
The AUD closed lower against most of its major peers, following a report that showed that Australian trade surplus narrowed to A$1.6 billion in October from a revised A$2.25 billion in September.
On Friday, the EUR closed higher against the USD, after the European leaders agreed on closer fiscal ties and other instruments to prevent the escalation of the European debt crisis, increasing the demand for riskier assets.
The CAD ended higher against the USD, as a rise in US consumer confidence and Europe’s latest plan to resolve the debt crisis, increased the demand for the high yielding currency.
Commodities Trading Review
In Asia, crude oil for January delivery is trading 0.1% or $0.12 lower at $99.29 per barrel.
On Friday, crude oil for January delivery added 1.1% or $1.07 to settle at $99.41 per barrel. This came amid expectation of an increase in energy demand, as European leaders agreed on new tighter fiscal rules to boost the region’s rescue fund, and after a report showed that confidence among US consumers rose to a six-month high.
Crude oil prices rose as they were supported by a fall in the dollar against the euro.
Gold for immediate delivery is trading 0.9% lower today, at $1,695.79 per ounce.
Gold for February delivery advanced 0.2% or $3.40 to end at $1,716.80 per ounce on Friday. This came as the dollar fell against the major currencies, increasing the demand for the precious metal as a hedge against inflation.
Financial Trading News
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'Crude Oil Sees Gains as European Leaders Agree Tighter Fiscal Rules' edited by ETX Capital, updated 12-Dec-11
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