Markets lift on rising Spain rescue hopes

European markets put in a strong performance for the last trading session of the week, heading into the close confidently in positive territory. The FTSE 100, however, lagged behind its peers on the continent, only just managing to close blue.

Europe was boosted by suggestions that Spain is moving towards measures that could pave the way for a bailout package. The Financial Times reported that European Union authorities were helping Spanish officials to draft a plan of economic reforms, focusing on measures that could be demanded by international lenders in a rescue programme.

Although it is definitely not the end of the Spanish problem, the markets believe, today at least, that this could be the beginning of the workings out of the situation.  Now, even though a bailout for Spain does not resolve the crisis, it certainly does remove an element of risk. That said with third quarter earnings season looming under the cloud of the slowdown in the eurozone, corporate earnings look like they could be the short term risk for the markets.

Here in the UK increased volatility and volume was evident on the FTSE 100 on quadruple witching day, the quarterly expiration of four different types of September equity futures and options contracts. Historically this is a positive day for trading but the FTSE showed weak gains closing up a mere four points.

Xstrata and Glencore dragged on the UK index as the takeover panel has granted a request to extend the deadline which was set for this Monday. Xstrata will now have until Monday, October 1 to announce its response to the Glencore merger deal. Xstrata closed down 4.1% whilst Glencore lost 1.6% of it share value.

On the day of the launch of iPhone 5 worldwide, which has seen Apple shares trade at $704 per share, a rise of over 1%, UK carrier Vodafone Group gained almost 2%, closing at 177.9p.  Expectation for the new device has been high and a successful launch for Apple was crucial. The stock is up over 72% so far this year in part on anticipation of this launch in addition to speculation about new products, so any disappointment would have been disastrous.