By Adam Haigh - Sep 29, 2011 7:36 PM GMT+0700
European stocks rose, erasing earlier losses, as U.S. reports showed claims for unemployment benefits fell more than forecast last week and the economy grew faster than estimated in the second quarter.
The Stoxx Europe 600 Index climbed 0.5 percent to 228.42 at 1:35 p.m. in London, having earlier dropped as much as 0.7 percent. The measure is heading for its worst quarter since 2008, having fallen 16 percent amid concern global economic growth is slowing and policy makers are struggling to contain the European debt crisis. The gauge has dropped 3.8 percent this month following a 10 percent slump in August.
Germany’s lower house of parliament approved the expansion of the European bailout fund, the European Financial Stability Facility, today in Berlin. Lawmakers in the Bundestag voted 523 in favor of the legislation, while 85 voted against; three abstained. The legislation is set to be debated and set to a non-binding vote in the upper house, or Bundesrat, tomorrow.
Even so, global investors anticipate Europe’s debt crisis leading to an economic slump, a financial meltdown and social unrest in the next year, with 72 percent predicting a country abandoning the euro as a currency within five years, a Bloomberg survey found.
About three-quarters of those questioned this week said the euro-area economy will fall into recession during the next 12 months and 53 percent said turmoil will worsen in a banking sector laden with government bonds, according to the quarterly Global Poll of 1,031 investors, analysts and traders who are Bloomberg subscribers. Forty percent see the 17-nation currency bloc losing at least one member in the next year.
Europe’s Woes
Europe’s woes have reignited as Greece attempts to stave off default and spars with its European Union partners over whether it deserves the next tranche of aid next month. Euro- area lawmakers are also taking their time implementing a July overhaul of their rescue fund to give it more crisis-fighting tools, while investors question the ability of banks to withstand further market unrest as signs also mount that the economy is losing momentum.
Italian and Spanish financial market regulators extended bans on short selling of financial shares that were introduced last month in a bid to stem market volatility. The Spanish ban will remain “until the market conditions allow it” to be lifted, the country’s financial regulator said late yesterday. Italy’s restriction, and another enacted by France in August, will both last until Nov. 11.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
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