European stocks rise on ECB optimism

Most European stock markets edged into positive territory on Tuesday as ECB President Mario Draghi expressed optimism about the prospects for agreement on a proposed EU banking union. In late trading, London's FTSE 100 index of leading shares had gained 0.30 percent to 5,856.18 points, Frankfurt's DAX was 0.09 percent higher at 7,420.18 points and in Paris the CAC 40 was up by 0.34 percent to 3,509.52. The Spanish stock market gained 0.50 percent even as the government's borrowing costs surged in a short-term 3.983-billion-euro ($5.1-billion) debt auction. Italian stocks edged up by 0.07 percent after Milan also paid rising rates in an otherwise successful 5.437-billion-euro bond auction. The European single currency climbed to $1.2958 from $1.2928 late in New York on Monday while gold prices firmed to $1,770.30 an ounce on the London Bullion Market, up from $1,762.50. In early US trades, the Dow Jones Industrial Average was up 0.16 percent at 13,580.73 and the broader S&P 500-stock index had gained 0.20 percent to 1,459.87. The Nasdaq Composite added 0.26 percent to 3,168.98 points. Draghi, the European Central Bank chief who addressed German industrialists in Berlin, said he was "confident that governments will find agreement on the appropriate framework" for a banking union. German Chancellor Angela Merkel, who spoke to the same body, had voiced support for a eurozone banking supervisor needed to underpin the union, but also insisted that "I can't talk about the direct recapitalisation of banks in other countries if I have not yet created the right to intervene". That is a sticking point since control over local banks is a sensitive topic in many eurozone countries. Meanwhile, Asian stocks were mixed earlier in the day, with traders spooked by news that German business confidence had hit a 31-month low level, wrangling over Greece's budget and speculation over a possible Spanish bailout deal. At the same time, investor sentiment has been hampered by recent poor data on the state of the Chinese economy. "A combination of soft Chinese data and the overhanging issues facing the eurozone have prevented the FTSE from becoming too optimistic," said analyst Alastair McCaig at trading group IG Markets. "The uncertainty over Spain's bailout requirements is still the major concern and it now seems that the Spanish will try to drag this out until after they have had their local elections." Spain has cut a deal with the European Union for a rescue loan of up to 100 billion euros ($125 billion) for banks hobbled by bad loans extended before a 2008 property market crash. But it has refused to be rushed into seeking a full-blown sovereign bailout until it knows the conditions. In Asia, the Tokyo market was 0.25 percent higher, adding 22.25 points to 9,091.54 but Sydney slipped 0.29 percent, or 12.6 points, to 4,372.9 and Seoul shed 0.60 percent, or 12.03 points, to 1,991.41. Hong Kong shares ended flat in quiet trading as a week-long Chinese holiday approaches. The benchmark Hang Seng Index nudged up 3.98 points to 20,698.68.