Equity markets higher on expectations of eurozone deal

<p>The recent equity market rally continued this morning as investors remained optimistic of the eurozone deal nearing its conclusion. The FTSE has rallied around 8% […]</p>

The recent equity market rally continued this morning as investors remained optimistic of the eurozone deal nearing its conclusion. The FTSE has rallied around 8% in the past two weeks with the CAC and DAX both adding around 15% in the last three weeks.

The FTSE is currently up 70 points (+1.23%) at 5536.5, with BP leading the way; helped by the heavily weighted mining stocks and the in-focus banking sector.

BP traded up to an early morning high of 440p, up +23p (5.3%), following an agreement with Anadarko Petroleum to settle all claims related to last year’s Deepwater Horizon accident. Terms of the agreement include Anadarko paying BP $4 billion and both parties agreeing to cease claims against each other. BP investors will also be buoyed by the UK government allowing BP and three partners to proceed with planned North Sea oil and gas projects.

Also in a buoyant mood this morning are the banking stocks, driven higher by a seemingly imminent international eurozone agreement to stem the European debt crisis and address bank recapitalisation issues. Barclays led the way, trading up 8p (+4.5%) to 184p, closely followed by RBS, up 4.3% to 25.3p and Lloyds at 34.2p, up 2.96%.

In early trading mining stocks helped to push the FTSE to a 10-week high but have since eased a little with Rio trading up 113.5p (3.4%) at 3459p, Kazakhmys up +30p (3.3%) to 930p and Xstrata up 21p (2.24%) to 996p. The latter is trading positively ahead of its Q3 2011 sales and revenue release due tomorrow morning.

With little macro data due out from Europe this morning, today’s early session should remain relatively quiet with volatility waning in recent days. Investors across Europe, and beyond, are awaiting an announcement regarding the planned, coordinated action to curtail the European debt crisis. For most the devil will be in the detail, but given the activity we have seen this morning investors are still happy to be buying financial stocks irrespective of their recent impressive moves. Investors are hoping that European powers have formulated a plan to cure the disease that has gripped Europe, but I would advise caution as at first glance the medicine may deal with the symptoms rather than the disease.

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