World markets up on Euro optimism

Photo / Thinkstock

Stocks on Wall Street and in Europe advanced overnight on renewed hope European Union leaders were committed to stemming the euro-zone's currency crisis.

In the US, declines in Citigroup and Apple kept a lid on gains in the benchmark stock indexes. In early afternoon trading, the Dow Jones Industrial Average rose 0.57 per cent, the S&P 500 Index rose 0.05 per cent and the Nasdaq Composite Index advanced 0.11 per cent

Citigroup dropped more than 5 per cent after charges related to tightening of the bank's credit spreads hurt earnings. Apple shed more than 3 per cent as CEO Steve Jobs took another, unexpected, leave of absence for medical reasons. Apple is set to release its latest quarterly results after the close.

In Europe, the benchmark Stoxx 600 index gained 0.9 per cent to 286.7, the highest close since September 2008.

Investors had high hopes for a meeting of European finance ministers and their efforts to shore up confidence in their ability to solve the euro zone's sovereign debt crisis.

"Clearly the fact that finance ministers are meeting and heads of state are going to meet in March indicates that they are taking the [euro zone debt] problem more seriously than three months ago," Richard Batty, strategist at Standard Life Investments in Edinburgh, told Reuters.

"There is some movement toward a resolution, though it is a very long process. The market is giving some form of benefit of the doubt to that process."

The euro climbed against the US dollar after the ZEW think tank in Germany said that about 50 per cent of investors expected the European Central Bank would have to raise interest rates within the next six months.

ZEW's monthly index climbed in December to its highest level since July.

The euro was last trading up 0.80 per cent on the day at US$1.3396.

The greenback was weaker against a basket of major currencies, with the US Dollar Index 0.36 per cent lower at 79.052. Against the Japanese yen, the US currency edged 0.05 per cent higher to 82.76.

Oil slipped after the International Energy Agency said it appeared that some Opec members had increased production. The IEA increased its 2011 world oil demand growth forecast in its monthly report.

Alaska's crude oil pipeline resumed operations on Monday and was expected to boost throughput to 500,000 barrels per day within 24 hours.

"The Alaska pipeline is running and that resumption is being priced in and is the major factor pulling prices lower. No one was surprised by the IEA and Opec reports or that Opec might be producing above quota," Phil Flynn, analyst at PFGBest Research in Chicago, told Reuters.

US crude oil for February delivery fell 0.14 per cent to US$91.41 a barrel at 12.23pm EST. The February contract expires on Thursday.