Global equities rose sharply in afternoon trading after a renewed pledge by France and Germany to come up with a plan to resolve the eurozone debt crisis by month's end lifted market sentiment.
By 4pm (London time) the S&P 500 surged almost 3% to 1187.46, while the Dow Jones was 2.4% higher at 11,365.82.
Across the pond, the FTSE 100 spread betting market was back above the 5400 level, hitting an intraday high of 5413.43.
Markets optimistic over promises from Europe
Dominating financial spread betting market sentiment this afternoon was news that German and French leaders, over the weekend, promised to unveil a new comprehensive package for solving the eurozone's debt crisis, despite failing to provide further details.
French president Nicolas Sarkozy said that the plan is expected to be delivered by 3 November, ahead of the G20 summit in Cannes, and further reiterated that by the end of the month eurozone leaders will have responded to the debt crisis. German chancellor Angela Merkel also said that European leaders will do ‘everything necessary’ to ensure that banks have enough capital to survive.
Meanwhile, Troika leaders continue to evaluate Greece before they give advice on the next steps, or the next tranche of bailout funds. EU, IMF and ECB leaders met Greek finance minister Evangelos Venizelos today to conclude talks.
Athens hopes to receive the next tranche of aid as without it, Athens could run out of cash by mid-November and risk entering a default, which could drag other eurozone economies down with it.
Troika leaders were initially hoping to conclude their visit by tomorrow, however European Union leaders have decided to postpone next Monday’s summit by a week on the grounds that Greece’s fiscal situation would not be ready in time for the gathering. The summit, which will now be held on 23 October, is expected to set a course for revisions to Greece’s second €109 billion bailout.
US recession forecast revised
Further boosting spread betting market sentiment this afternoon was a third-quarter US GDP upgrade from Goldman Sachs.
After a series of better-than-expected economic data releases, including Friday’s 103,000 rise in payrolls last month, and a significantly higher upward revision to 57,000 in August, Goldman Sachs Group raised their growth forecasts for third-quarter growth to 2.5% from about 2%. The report led to speculation that the US will avoid another recession, at least for now.
The forecast is nearly double that of the second quarter’s 1.3% rate and would be the fastest growth in a year. Nonetheless, US economic recovery is still likely to face lot of headwinds.
Conversely, an economist from Goldman Sachs said that the debt crisis will likely slow Europe’s economy to the edge of recession by early 2012, and growth could fall to only 0.5% in the first quarter of 2012.
All bets are off
The online gambling operator, Sportingbet, saw its shares tumble today after it announced that it had terminated takeover talks with Ladbrokes.
Sportingbet said in a statement released this morning that the boards of the two companies mutually agreed to end discussions as neither party were able to agree a suitable structure that delivered sufficient value to shareholders in a meaningful timeframe.
Sportingbet announced that it would remain focused on its overall strategy of providing a first class sports betting product, and of increasing its exposure to regulated markets, while Ladbrokes would continue to focus on organic growth of its online gambling services.
Shares in Sportingbet were 19.6% lower at 36.75p, while Ladbrokes gently lost its footing and was only 2.5% lower at 117.6p.
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'FTSE 100 Spread Betting Market Up on Franco-German Debt Plan Pledge', Article by IG Index, last update: 10-Oct-11
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