This Morning's Top Euro Stories

Published in Investing on 29 June 2012

European stocks bounce after EU summit eases Spanish bailout terms.

European stock markets look set to finish the week on a high today, after some dire performance this week, as the EU summit in Brussels seems to have come out with some positive results.

The eurozone's leaders have agreed to restructure the terms surrounding the recent bailout of Spanish banks, which among other things will mean that the so-called 'taxpayer backed debt' will not get preferred debtor status, and leaves the Spanish banks expecting to receive the injection of capital directly.

In addition, the summit resulted in a number of measures that would also ease Italy's requirements if it were to seek a bailout, making it more likely the country will be the sixth nation to do so. As you might expect, the Spanish IBEX (INDEX: ^IBEX) is one of the best performing European indices today, up around 2.6%.

The banking sector has been the main benefactor of this news in Europe, with a broad risk-on attitude sweeping the continent's financial majors (although not necessarily banks in London). In addition, the Basel committee has today said it will be easing the capital ratio requirements for European banks, which have previously been drafted and deemed by many as too severe. With this, BNP Paribas (OTC: BNPQY.PK) is one of the best performers on the CAC-40, up over 5.7%.

Away from the banking sector, industrial and manufacturing stocks are also seeing strong gains amid this return in confidence. A bounce in commodity prices is offering additional support as the prospects for better than expected revenues begin to surface. Ireland's CRH (NYSE: CRH.US) is making some of the most significant gains in the sector, up 4.7% this morning.

In a similar fashion the auto-majors have been making decent headway in European trade, led by Germany's Daimler (OTC: DDAIF.PK) after the company announced they have agreed a deal with Nissan to jointly supply each other with light-duty trucks in Japan. Daimler's Mitsubishi Fuso will supply Nissan with its Canter truck, in exchange for Nissan's smaller Atlas F24.

On the other side of the market, France's Suez Environnement (OTC: SZEVY.PK), Europe's second-largest water utility, is seeing some heavy losses on this otherwise buoyant day, down 7% in Paris after they gave a profit warning this morning. The company said that profits would be hit by the uncertain economic outlook in Europe and as one of their Australian contract faces further delays. They said they now expect earnings before interest, taxes, depreciation and amortisation (EBITDA) to be flat in 2012.

As always, this morning's European news saw some winners and losers -- and perhaps some European buying opportunities. Indeed, legendary investor Warren Buffett has recently spent more than $1 billion buying the stock of a prominent European large-cap.

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> Karl does not own any share mentioned in this article.

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theRealGrinch 29 Jun 2012 , 2:17pm

shares will be lower.

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