Thursday, October 27, 2011

European debt deal ignites rally in stocks

A long-awaited plan to staunch the European debt crisis sparked euphoria across financial markets on Thursday, driving up the euro and the price of world stocks and commodities, while thrashing the dollar.

US stocks surged 3 percent as an agreement by European leaders to help contain the region's two-year debt crisis lifted a cloud hovering over markets.

Optimism that a deal would be struck to prevent widespread financial distress fueled the market's rebound in October. The S&P 500 is up more than 13 percent this month, on pace for its biggest monthly gain since October 1974.

The Dow Jones industrial average was up 339.51 points, or 2.86 percent, at 12,208.55. The Standard & Poor's 500 Index was up 42.59 points, or 3.43 percent, at 1,284.59. The Nasdaq Composite Index was up 87.96 points, or 3.32 percent, at 2,738.63.

Europe's FTSEurofirst 300 gained 3 percent, while European bank shares, which have been hit by concerns that a Greek default would lead to a banking crisis, surged nearly 7 percent, with Greek bank stocks up more than 10 percent.

In Asia, the Nikkei share average climbed 2% to close above 8,900 for the first time since early September after policymakers reached a deal to contain the euro zone crisis, helping the market shake off some of the gloom brought on by a yen near record highs.

The Nikkei finished up 2 percent at 8,926.54, while the broader Topix index gained 2.2 percent to 762.79.