While you were sleeping: Barclays 'strong start,' Bernanke view

Tuesday 17th March 2009

Shares rallied in Europe for a fifth straight session after Barclays Plc said it had a "strong start" to 2009 and is in talks to sell its iShares exchanged-traded funds unit. Barclays jumped 23%, pacing a rally in financials.

Stocks were little changed on Wall Street, paring an earlier gain on the Barclays news and after Federal Reserve chairman Ben Bernanke said the world's biggest economy will avoid depression and, with enough political will, can climb out of its slump by the end of this year.

The FTSE 100 Index climbed 2.9% to 3863.99 in London, led by Barclays. The Dow Jones Stoxx 600 Index climbed 2.7% to 173.19. Bank of Ireland surged 31%, leading the regional benchmark higher. Investment firm Intermediate Capital Group Plc climbed 27% and Belgium banking group KBC Groep gained 14%.

Germany's DAX 30 climbed 2.3% to 4044.54, led by a 16% for Infineon, a 6.7% advance in E.ON and Commerzbank rose 6.7%. Munich Re rose about 5% and Deutsche Bank climbed 4.7%.

In France, the CAC 40 rose 3.2% to 2791.66, with Dexia SA gaining 13%, Societe Generale rising 11%, BNP Paribas up 9% and Credit Agricole up 8%.

European stocks rose even after European Union statistics showed payrolls shrank by the most on record in the fourth quarter. Employment fell 0.3%, according to the European Union statistics office. Other figures showed inflation was little changed in the Euro region at the lowest in about 10 years.

Barclays joined Citigroup, JPMorgan Chase, Deutsche Bank and Bank of America in flagging a stronger start to the year, helping investors to believe the slump in global financial markets will end and worldwide economic growth will return.

Citigroup soared 26% to US$2.25 and Bank of America rose 8.7% to US$6.24, though there advance wasn't enough to spur a rally in the Dow Jones Industrial Average, which fell 0.1% to 7216.97.

General Motors fell 9.6% to US$2.46, Merck declined 3% to US$26.25 and Home Depot rose 2.6% to US$20.18.

The Standard & Poor's 500 Index slipped 0.4% to 753.89. The Nasdaq Composite dropped 1.9% to 1404.02 as Hewlett-Packard fell 1.2% to US$29.09 and Microsoft dropped 2% to US$16.32.

US industrial production fell last month, the fourth monthly slide, while manufacturing tumbled.

Output fell 1.4% in February and was 11% lower than in the same month of 2008, according to the Federal Reserve.

US homebuilder confidence held near a record low this month, with little evidence of an end to the slump.

The National Association of Home Builders/Wells Fargo index of homebuilding confidence was unchanged at 9 from February. A reading below 50 means most of those surveyed see poor conditions.

American International Group disclosed the identities of the banks and US states that shared US$105 billion of US funds under pressure from President Barack Obama down to disclose names of employees who will shares US$1 billion in retention pay.

Obama called AIG's retention payments unwarranted and New York state Attorney General Andrew Cuomo warned he would subpoena AIG if it didn't identify the recipients.

"It's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay," said Obama said in a speech in the White House. "How do they justify this outrage to the taxpayers who are keeping the company afloat?"

Crude oil rose to a two-month high amid optimism an end to the global economic slump will revive demand for fuel.

Crude oil for April delivery rose 2.4% to US$47.35 a barrel on the New York Mercantile Exchange.

Copper rose to a four month high after figures showed China's imports of the metal gained to a record last month. Copper futures for May delivery rose 5% to US$1.747 a pound on the New York Mercantile Exchange.

Gold for April delivery fell 0.6% to US$924.20 an ounce in New York as optimism about world growth sapped demand for the precious metal as an alternative investment.

The euro gained against the US dollar and the yen on optimism banks are past the worst of their crisis.

The euro rose to $1.2971 from $1.2928 and was at 127.46 against the yen from 126.26. The yen was at 98.24 per dollar from 97.95.

Comments from our readers

No comments yet