A roundup of trading on major world markets:
NEW YORK – US stocks rallied Tuesday after a British newspaper reported that France and Germany were ready to sharply boost the eurozone’s rescue fund in a bid to address the public debt crisis.
The Dow Jones Industrial Average surged 180.05 points (1.58 per cent) to finish at 11,577.05.
The tech-heavy Nasdaq Composite rose 42.51 points (1.63 per cent) to 2,657.43, while the S&P 500, a broader measure of the markets, advanced 24.52 points (2.04 per cent) to 1,225.38.
Citing unnamed European Union diplomats, The Guardian reported that the leaders of France and Germany, the eurozone’s biggest economies, have agreed to boost the rescue fund to two trillion euros ($A2.72 trillion).
Stocks, which had opened lower after Monday’s sell-off then climbed in the afternoon, jumped more than one percentage point in the final hour of trade after The Guardian report came out.
Banks also pulled the markets up with positive earnings reports, despite what analysts said were accounting tactics which masked weaknesses and evidence that banks are still suffering large levels of default on loans to consumers and home buyers.
Bond prices were mixed. The yield on the 10-year Treasury fell to 2.15 per cent from 2.16 per cent late Monday, while that on the 30-year Treasury rose to 3.16 per cent from 3.14 per cent.
Bond yields and prices move in opposite directions.
LONDON – European stocks mostly fell and the euro slid against the US dollar after Moody’s warned that its credit rating for France could be put on negative outlook, reigniting eurozone debt fears.
Shares were also hit by weaker-than-expected Chinese growth data, news which weighed heavily on Asia-Pacific shares.
The Paris CAC 40 index fell 0.79 per cent to 3141.1 points on Tuesday after Moody’s warned it may place a negative outlook on its AAA credit rating for France as the government’s financial strength “has weakened.”
The annual credit report released on Monday was a shot across the bow for the second largest economy in the eurozone, which currently enjoys the top credit rating from Moody’s and rival ratings agencies.
London’s FTSE 100 index of leading shares slid 0.49 per cent to 5410.35 points, as investors also reacted to news that British annual inflation hit a three-year high of 5.2 per cent in September.
Frankfurt’s DAX 30 dropped around one per cent after data showed German investor confidence fell to the lowest level for nearly three years in October, but rallied to close up 0.31 per cent on 5,877.41 points.
In foreign exchange trade, the euro slipped to $1.3719 from $1.3734 late in New York on Monday, on fading hopes that EU leaders would unveil firm plans to resolve the eurozone debt crisis when meeting at a summit this weekend.
The dollar slipped to 76.76 yen from 76.82 yen and gold prices dropped to $1,631 an ounce from $1,682.
Market sentiment was also hit by China announcing that its economic growth slowed to 9.1 per cent in the third quarter as government efforts to tame inflation and turbulence in Europe and the US curbed activity.
Growth in the world’s second-largest economy slowed from 9.5 per cent in the second quarter to its lowest rate in two years, the National Bureau of Statistics (NBS) said on Tuesday.
HONG KONG – Asian markets sank after China posted lower-than-expected economic growth, while ratings agency Moody’s warned France it may lower its credit rating amid growing eurozone debt worries.
Tokyo closed down 1.55 per cent, or 137.69 points, at 8,741.91, Sydney slumped 2.07 per cent, or 88.5 points, to 4,186.9, while Seoul lost 1.41 per cent, or 26.28 points, to finish at 1,838.90.
Hong Kong’s benchmark Hang Seng index plunged 4.23 per cent, or 797.53 points, to 18,076.46 with Shanghai losing 2.33 per cent, or 56.91 points, to 2,383.49.
The broad drop across the major regional stock markets reversed an Asian rally Monday largely driven by a weekend meeting where Europe vowed to its G20 partners to take swift and decisive action on tackling its debt crisis.
Investor sentiment was dented by warnings from Germany against too much hope that an EU summit this weekend will produce a comprehensive solution to Europe’s fiscal woes.
Beijing said third-quarter gross domestic product growth slowed to 9.1 per cent, and factory output growth fell slightly in the first nine months of the year.
The dollar stood at 76.64 yen, down from 76.81 yen earlier Tuesday.
WELLINGTON – The NZX 50 fell 37.85, or 1.1 per cent, to 3279.10. Within the index, 27 stocks fell, six rose and 17 were unchanged. Turnover was a lower-than-average $77.1 million.
