Miners, Banks Lift European Indexes; Greek Bailout Cost Rises

Nichole Harper
03 Feb, 2012
New York City

European markets closed higher and advanced in the week as miners and bank led the gainers. Market sentiment was cautious after Greek bailout cost was raised by

[R]5:30 PM Frankfurt – European markets closed higher and advanced in the week as miners and bank led the gainers. Market sentiment was cautious after Greek bailout cost was raised by €15 billion.[/R]

The market indexes across Europe opened higher and gained more after the U.S. jobless rate declined for the fifth month in a row.

Market sentiment was positive at the opening after euro zone sector growth expanded in January for the first time in August.

The market also weighed the rising cost of the Greek bailout and several European Union officials confirmed that the bailout cost can rise by as much as €15 billion. Greece will need €115 billion to pay expenses and 15 billion to recapitalize banks and 30 billion to finance the debt swap with the private sector.

The new was first reported by Reuters and later confirmed by Ticker.com.

The lack of decision between Greece and international lenders also unnerved bond market and raised the prospect more delays in arranging the final agreement.

The DAX index increased 98.8 or 1.5% to 6,754 and CAC-40 index gained 1.1% or 37.5 to 3,414. For the week, the DAX added 3.6% and the CAC 40 increased 2.9%.

Trading in metals market was choppy after the U.S. non-farm payrolls rose but China reported weak reading in the service sector. Copper headed for its first weekly loss after three weeks of rise.

Stock Movers

Banks closed higher as the added liquidity from the European Central Bank has bolstered the liquidity in the system.

Deutsche Bank increased 37 cents to €34.10, Societe Generale SA gained 7.3% to €24.25 and Intensa Saopaolo SpA added 1.1% to €1.56.

Daimler AG increased €1.36 to €45.46 and Volkswagen AG added €3.28 to €128.28.

Greek banks were in focus after the debt management office said it plans to auction €625 million of six month treasury bills on February 7. The new debts will roll over the previous one billion euros of debt that is due on February 10.

Tullow Oil plc increased 3.5% to 1,490.02 pence after company and Uganda signed two production sharing agreements and agreed to the construction of a refinery that may be increased to the capacity of as much as 150,000 barrels a day.

BHP Billiton plc declined 0.6% to 2,180 pence and Rio Tinto plc dropped 1.1% to 3,934.24 pence. Xstrata plc rose 1.8% to 1,252.09 pence.