New hope for Eurozone buoys global markets

Stocks rose broadly in morning trading yesterday on hopes for a plan to restore long-term confidence in the euro. The Dow Jones industrial average jumped 140 points, led by banks. Italian bond yields dropped sharply after the new government there introduced new austerity measures aimed at restoring confidence in that country's debt. The euro and commodities prices rose. Yields on Italian bonds dove to their lowest level in a month, suggesting traders believe that Italy is far less likely to default. The main Italian stock index jumped 3 per cent In Europe, the FTSE 100 index of leading British shares was up 0.4 per cent at 5,577, while Germany's DAX rose 0.7 per cent to 6,121. The CAC-40 in France was 1.2 per cent higher at 3,203. "The market is pricing in a positive outcome, with fiscal convergence across the Rurozone being the main focus," said Jordan Lambert, a trader at Spreadex. The biggest gainer was Italy's FTSE MIB, which was trading up 3.1 per cent, a day after the government led by Premier Mario Monti agreed to big austerity and growth-boosting measures. The proposals are being presented to a sceptical Parliament. The Dow Jones industrial average rose 143 points, or 1.2 per cent, to 12,162 in the first hour of trading. The Standard & Poor's 500 index rose 19, or 1.5 per cent, to 1,263. The Nasdaq composite index gained 38, or 1.4 per cent, to 2.665. Broad gains The gains were broad, lifting 28 of the 30 stocks in the Dow and all 10 industry groups in the S&P 500. Financials stocks were among the biggest winners. Investors have feared that US banks might be dragged down by their close connections to the unstable European financial system. JPMorgan Chase & Co jumped 4.5 per cent, the most in the Dow. Bank of America was the second-biggest gainer of the Dow 30, rising 3.7 per cent. Citigroup Inc. rose 6 per cent, Morgan Stanley 4.3 per cent. Yesterday's strong gains follow the best week in more than two years for US stock indices. The S&P 500 rose 7.4 per cent last week, the most since March 2009.