Bloomberg News

European Stock Futures Gain on Summit Optimism; Banks May Move

December 07, 2011

Dec. 7 (Bloomberg) -- European stock futures rose on speculation that euro-area leaders will agree on steps to resolve the debt crisis at a summit this week and expand the funds available for the bailout of indebted nations. Asian stocks and U.S. index futures also advanced.

Banks including Deutsche Bank AG and BNP Paribas SA may be active. Verbund AG, Austria’s biggest utility, may move after Morgan Stanley raised its recommendation on the stock. Carrefour SA may be active after a newspaper report that it plans an offer for franchiser Guyenne and Gascogne SA.

Futures on the Euro Stoxx 50 Index, a benchmark for the euro region, gained 0.9 percent to 2,383 at 7:02 a.m. in London. Futures on the U.K.’s FTSE 100 Index climbed 0.7 percent. The December contract the Standard & Poor’s 500 Index added 0.8 percent, while the MSCI Asia Pacific Index increased 1.3 percent.

The Stoxx Europe 600 Index slipped 0.3 percent yesterday after Standard & Poor’s put 15 euro-area nations on credit- rating review. The gauge posted its biggest rally since November 2008 last week as central banks lowered the interest rate on dollar funding and China reduced its reserve ratio for banks.

The Financial Times reported that Europe may combine temporary and planned permanent rescue facilities to bolster its bailout resources.

“S&P may have put most of the eurozone on the watch list for a possible ratings downgrade, but with reports now emerging that the EFSF could be almost doubled in size, the bulls are once again back in the driving seat,” Terry Pratt, institutional trader at IG Markets in Melbourne, wrote in a note.

A German-French push for closer economic ties in Europe won the backing of U.S. Treasury Secretary Timothy F. Geithner, who urged governments to work with central banks to erect a “stronger firewall” to end the debt crisis. Geithner, speaking in Berlin yesterday after talks with German Finance Minister Wolfgang Schaeuble, praised the commitment to fiscal programs put in place by new governments in Spain, Italy and Greece, and said he was “very encouraged” by recent efforts to buttress the euro area.

The downgrade warnings came as German Chancellor Angela Merkel and French President Nicolas Sarkozy push for a rewrite of the EU’s governing rules to tighten economic cooperation in a demonstration of unity on ending the debt crisis. With the fate of the currency shared by the 17 euro countries at risk, Merkel and Sarkozy presented a common platform for a Dec. 8-9 summit of EU leaders in Brussels that aims to halt the crisis now in its third year.

At its meeting tomorrow, the European Central Bank will cut its benchmark interest rate to 1 percent from 1.25 percent, according to the median estimate of economists surveyed by Bloomberg News.

To contact the reporter on this story: Srinivasan Sivabalan in London at ssivabalan@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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