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European shares shrug off Spain downgrade

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Arab Today, arab today European shares shrug off Spain downgrade

London - AFP

Europe\'s main stock markets rose on Thursday, shrugging off Standard & Poor\'s slashing Spain\'s credit rating, and gained added steam from a big drop in US jobs claims. London\'s benchmark FTSE 100 index of top companies climbed 0.99 percent to 5,833.82 points in afternoon deals, as Frankfurt\'s DAX 30 won 1.19 percent to 7,290.85 points and in Paris the CAC 40 jumped 1.24 percent to 3,407.64. Wall Street opened strongly after the US Labor Department reported that new claims for unemployment insurance benefits plunged unexpectedly last week to a four-year low of 339,000. Five minutes into trade the Dow Jones Industrial Average had climbed 0.34 percent to 13,390.44 points, while the S&P 500 gained 0.64 percent to 1,441.66 points, and the tech-rich Nasdaq shot up 0.76 percent to 3,074.98 points. In foreign exchange trading, the euro rose to $1.2924 from $1.2887 late in New York on Wednesday. Gold prices advanced to $1,767.25 an ounce on the London Bullion Market from $1,761.25 an ounce on Wednesday. \"Stocks and commodities have caught a tailwind today, boosted by better than expected jobs numbers out of the United States,\" said CMC Markets analyst Colin Cieszynski. Spain vowed Thursday to defy predictions of a deep recession next year after the credit rating downgrade left its debt hovering just above junk-bond status. Standard & Poor\'s sliced the nation\'s rating late on Wednesday, citing a deepening recession with one-quarter of workers unemployed, mass protests, and growing political friction between Madrid and the debt-struck regions. S&P cut the rating to BBB- from BBB+, just one level above \"speculative\" or \"junk\" grade debt, which could have sent Madrid\'s borrowing costs sky-rocketing to untenable levels. \"There were concerns earlier that the two-notch Spanish downgrade would have a negative effect on the markets given the uncertainty surrounding Spain at the moment,\" said James Hughes, chief market analyst at Alpari trading group. Madrid\'s IBEX 35 index spent the morning down, but climbed into positive territory after the US jobs numbers, showing a gain of 0.43 percent shortly after Wall Street opened. \"What we\'ve actually seen is only a very small reaction given the scale of the downgrade to near junk status.\" Although Spanish bond yields were trading higher on Thursday, Hughes said they remained \"far below the levels that are considered to be unsustainable.\" S&P expressed doubts that all eurozone governments would back the bloc\'s effort to recapitalise Spanish banks, leaving more of the burden at least on the Spanish government, which might need a full bailout. Investors in Europe were also digesting a clutch of earnings updates on Thursday. In London, shares in Burberry soared 13.4 percent to 1,137 pence after the British luxury clothing and accessories group\'s second-quarter performance reassured markets despite a recent profits warning. Burberry added that it would bring its perfume business totally in-house following the end of a licence relationship with French company Interparfums early next year. Burberry said sales grew by 3.0 percent during its second quarter, or three months ending September 30, to £475 million ($760 million, 591 million euros), which compared with 11 percent growth in the group\'s first quarter. Despite the slowdown, Seymour Pierce financial group said in a note to clients they were \"reassured that demand has not fallen off a cliff and so believe the shares have been oversold\" in recent weeks. One month ago, Burberry shares tumbled by a fifth in just one day and had failed to recover prior to Thursday\'s update after the British firm issued a surprise profits warning which analysts blamed on China\'s economic slowdown. In Paris meanwhile, shares in Carrefour jumped 4 percent to 16.63 euros after the French supermarket giant said its third quarter sales gained 2.1 percent, helped by an increase in its ailing home market and in Latin America. On Wall Street, opening action focused on Sprint Nextel, whose shares immediately soared 17 percent on a report that Japan\'s Softbank was planning a bid for the number three US wireless carrier.

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