European Markets Rise On Spain Expectations

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By Bhaskar Prasad | September 27, 2012 5:55 PM EST

European markets rose Thursday as investor sentiment turned positive with expectations that Spain would soon seek help to reduce its increasing debt burden.

The French CAC 40 index advanced 0.57 percent or 19.36 points to 3434.20.  Shares of Lafarge SA gained 1.82 percent and those of Renault SA advanced 1.02 percent.

London’s FTSE 100 index was up 0.45 percent or 26.02 points to 5794.11. Shares of Evraz PLCrose 2.06 percent and those of Shire PLC gained 1.73 percent.

The German DAX 30 index gained 0.49 percent or 35.33 points to 7311.84. Shares of Bayer AG rose 1.11 percent and shares of Siemens AG advanced 0.73 percent.

Spain's IBEX 35 was up 0.19 percent or 14.60 points to 7869. Shares of Acciona SA rose 3.13 percent and those of Abengoa SA advanced 1.85 percent.

Investors are expected to focus on Spain with the Spanish government presenting both its structural reforms and 2013 budget plan Thursday. Discussions are going on between the European Commission and the Spanish government which will produce positive results to put in place the measures required to have the bailout. This will in turn make sure that Spain will soon announce its decision to seek help from the newly declared bond-buying program by the European Central Bank.

Market players expect that policy measures represent a good opportunity to pave the way for a rescue program with the ECB support. Market participants expect Spain to ask for a bailout under the enhanced conditions credit line (ECCL), which will trigger the bond purchasing operation by the ECB.

The ECB's recent promise to buy the peripheral government bonds without limit has certainly helped boost the financial market sentiment. But the market players are worried about the disagreement between Germany and France over the formation of a banking union as part of the measures to overcome the debt burden faced by the euro zone.

The French CAC 40 index advanced 0.57 percent or, 19.36 points to 3434.20.  Shares of Lafarge SA gained 1.82 percent and shares of Renault SA advanced 1.02 percent.

London’s FTSE 100 index was up 0.45 percent or, 26.02 points to 5794.11. Shares of Evraz PLCrose 2.06 percent and shares of Shire PLC gained 1.73 percent.

The German DAX 30 index gained 0.49 percent or, 35.33 points to 7311.84. Shares of Bayer AG rose 1.11 percent and shares of Siemens AG advanced 0.73 percent.

Spain's IBEX 35 was up 0.19 percent or, 14.60 points to 7869. Shares of Acciona SA rose 3.13 percent and shares of Abengoa SA advanced 1.85 percent.

Investors are expected to focus on Spain with the Spanish government presenting both its structural reforms and 2013 budget plan Thursday. Discussions are going on between the European Commission and Spanish government which will produce positive results to put in place measures required to have the bailout. This will in turn make sure that Spain will soon announce its decision to seek help from the newly declared bond-buying program by the European Central Bank.

Market players expect that policy measures represent a good opportunity to pave the way for a rescue program with the ECB support. Market participants expect Spain to ask for a bailout under the enhanced conditions credit line (ECCL), which will trigger the bond purchasing operation by the ECB.

The ECB's recent promise to buy peripheral government bonds without limit has certainly helped boost financial market sentiment. But market players do have concern that disagreement continue to prevail between Germany and France over the formation of a banking union as part of the measures to overcome the debt burden faced by the euro zone.

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