26 Sep 2008

European stocks snap losing streak

6:05 am on 26 September 2008

European stocks ended sharply higher on Thursday, rising for the first time in four sessions on renewed optimism over a US bank rescue plan.

The FTSEurofirst 300 index of top European shares closed 2.2% higher at 1,125.46 points. The index is down 25% this year to date.

US lawmakers were getting close to an agreement on a $US700 billion bailout plan on Thursday with more protections for taxpayers.

Banking stocks were among the biggest gainers: Credit Agricole gained 6.5% and Royal Bank of Scotland added 5%. UBS rose 5.1% on speculation that HSBC could bid for the Swiss lender.

However, a profit warning was issued in the United States by General Electric. The industrial conglomerate said the crisis in global credit markets could reduce its profit by as much as 12%.

In other economic news: US sales of newly constructed single-family homes in August fell to their lowest point in more than 17 years while prices hit four-year lows.

New orders for long-lasting manufactured goods dropped by 4.5% in August.

Around Europe on Thursday: Germany's DAX index added 2% and France's CAC 40 gained 2.7%. The Swiss market index was up 2.44%.

In Britain, the FTSE 100 index rose 2%, by 101.5 points, to 5,197.0, after falling 4.1% in the previous three sessions. The index is down by almost 20% this year to date.

Markets lower in Asia-Pacific

Markets in the Asia-Pacific region were lower on Thursday, amid concerns over the US bailout of its troubled financial system.

The New Zealand sharemarket fell 22 points to close at 3238 on turnover of $78 million on Thursday.

Telecom was down 5 cents to $2.79, while Fletcher Building dropped 4c to $7.35 and Contact Energy rose 1c to $8.51.

Rakon fell 10c to $2.35 after technology investor Peter Maire sold part of his stake in the company.

The Warehouse was up 3c to $3.20.

ANZ remained unchanged at $23 following an announcement that it plans to cut frontline staff at its ANZ New Zealand retail branches.

The Australian share market finished weaker after directionless trading as major traders stood aside on uncertainty over the US government's proposed $US700 billion financial markets rescue package.

At 1615 AEST, the S&P/ASX200 was 54.5 points lower, or 1.09%, to 4927.4, while the All Ordinaries lost 47.4 points, or 0.95%, to 4960.8.

Japanese share prices have closed down 0.90% due to continued nervousness over the US bailout rescue package.

The Tokyo Stock Exchange's benchmark Nikkei-225 index lost 108.50 points to 12,006.53. The broader Topix index of all first-section shares dropped 14.02 points or 1.21% to 1,153.95.