European indexes higher Wednesday, 01 February 2012 23:58

LONDON: European stock markets closed sharply higher yesterday as positive Chinese manufacturing helped to offset concerns over dragging talks on a crucial Greek debt write-down deal.

Dealers said hopes especially of a soft landing for the Chinese economy, ranked number two and the driver of global commodity markets, reassured investors worried that the eurozone debt crisis could spark a new recession. At the same time, they said the markets have been here many times before as far as Greece is concerned, with officials saying a deal with private creditors is close, so a note of caution remained.

On the positive side, the prospect of a Facebook listing, which could value the social network group at up to $100bn, stoked interest and help power Wall Street to solid opening gains. Additionally, reports that banks would use an upcoming offer of very cheap 3-year funds from the European Central Bank to source twice or even three times the nearly ¤500bn they took in December added to the positive tone.

Some analysts believe that much of this money could find its way into the markets, easing borrowing costs in the eurozone and eventually giving the economy a boost. In London, the FTSE 100 index of leading shares closed up 1.92 percent at 5,790.72 points. In Paris, the CAC-40 index jumped 2.09 percent to 3,367.46 points and in Frankfurt the DAX 30 rose 2.44 percent to 6,616.64 points.

Other European markets posted similar strong gains, with Milan putting on 2.14 percent as Madrid added 2.20 percent. In New York, the market opened higher as an expected Facebook debut fired up sentiment. The blue-chip Dow Jones Industrial Average was up 1.12 percent at around 1650 GMT and the tech-heavy Nasdaq gained 1.10 percent.

Facebook is poised to file papers for an IPO seeking to raise at least $5bn, according to US reports. The euro was higher at $1.3199 from $1.3080 in New York on Tuesday as the stronger data encouraged investors to take on riskier assets at the expense of the dollar. AFP

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