Business | Markets
European stocks end week of steep rises, deep tumbles
European stocks climbed last week, sending the Dow Jones Stoxx 600 Index to its biggest gain since March 2007, after governments announced bank rescue packages to shore up the financial system and restore investor confidence.
- Bloomberg
- Published: 00:11 October 20, 2008
Zurich: European stocks climbed last week, sending the Dow Jones Stoxx 600 Index to its biggest gain since March 2007, after governments announced bank rescue packages to shore up the financial system and restore investor confidence.
Credit Suisse Group AG posted a record weekly advance and Barclays Plc climbed 6.5 per cent as European leaders agreed to guarantee new bank debt and money-market rates declined. Ericsson rallied 12 per cent as its mobile-phone venture with Sony Corp. reported a smaller-than-estimated loss.
The Stoxx 600 added 4.5 per cent to 214.27. The gauge jumped 13 per cent in the first two days of last week, the biggest two-day surge on record, before posting the steepest two-day tumble since 1987 after reports showed a drop in US retail sales and the highest UK unemployment since November 2006.
The benchmark index for European equities is down 41 per cent this year as credit losses and asset writedowns at financial firms worldwide reached $660 billion, pushing the global economy toward a recession.
"The government measures were a huge progress to win back trust," said Erwin Brunner, who oversees the equivalent of $442 million as executive officer at BrunnerInvest AG in Zurich.
"The slump in the US remains the dominant factor and Europe follows. I can't see how the economy can grow given the financial problems, we will go into a recession."
The US said it would invest $250 billion in the nation's banks and urged lenders to use the funds to spur economic growth. The injection came after France, Germany, Spain, the Netherlands and Austria pledged 1.3 trillion euros ($1.8 trillion) to guarantee bank loans and take stakes in lenders.
Rio Tinto Group Plc and Xstrata Plc led a slump among commodity producers, limiting gains in the Stoxx 600, on concern that slowing economic growth will curb demand for raw materials.
National benchmark indexes rose in 11 of the 18 western European markets. Germany's DAX Index increased 5.2 per cent. France's CAC 40 advanced 4.8 per cent, while the UK's FTSE 100 added 3.3 per cent.
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