US stocks rally as Europe unveils crisis plans
Associated Press June 29, 2012U.S. markets on Friday cut loose from the anchor of European debt that has weighed them down for months. The Dow Jones industrial average jumped more than 200 points in early trading after European leaders agreed to easier bank bailouts and regional oversight for their troubled financial sector.
Leaders in Brussels unveiled a plan to funnel money to banks directly from a regional bailout fund. They also agreed to ease austerity measures that have been causing political unrest and agonizing recessions in Greece and other nations that have received bailouts.
The Dow Jones industrial average rose 210 points to 12,812 as of 10:15 a.m. EDT. Its biggest gainer was industrial and aerospace giant United Technologies, which rose $2.12, or 3 per cent, to $74.72.
The Standard & Poor's 500 index rose 25 points to 1,353. Only 10 of the 500 companies in the S&P 500 were lower.
The Nasdaq composite average gained 60 points to 2,909.
The news out of Brussels also lifted energy prices, on the theory that a cure to Europe's debt woes will remove one of the major drags on global growth. Benchmark oil jumped 5.5 percent, or $4.30, to $81.98 a barrel on the New York Mercantile Exchange, a day after hitting an eight-month low.
Industrial and energy stocks rose the most of the 10 industry groups in the S&P 500. Those companies would benefit from higher oil prices and faster global growth.
The two-day summit in Brussels is the 19th meeting for European leaders since the debt crisis emerged, and leaders have repeatedly clashed over how best to address it. European Council President Herman Van Rompuy called Friday's agreement a "breakthrough."
Consensus in Europe was reached after borrowing rates in Spain - where unemployment is approaching 25 per cent - and Italy hit unsustainable levels. The fear was that the weaker economies of Europe would drag the entire continent into recession, or worse.
Stocks around the world surged on Friday, with markets in countries on the front line of the crisis doing particularly well. Italy's FTSE MIB and Spain's IBEX indexes each rose more than 4 per cent.
Perhaps more importantly, the yield on Spain's 10-year bond dropped by 0.46 percentage points to 6.44 per cent. Italy's was down by 0.26 percentage points to 5.82 per cent. The decrease reflects greater confidence by investors that the countries will be able to service their debts.