Markets lift on rising Spain rescue hopes

<p>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 […]</p>

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.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.