European stocks advance as Germany votes for Greece bailout

Updated: 2012-02-29 07:59

(China Daily)

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ATHENS, Greece - European stocks advanced, with the Stoxx Europe 600 Index erasing Monday's drop, after Germany's parliament voted to approve a second package of financial aid for Greece. US index futures and Asian shares also gained.

PSA Peugeot Citroen jumped 7 percent after the company was said to plan a stake sale to General Motors Co.

The Stoxx 600 rose 0.4 percent to 264.88 at 8:48 am in London as more than three shares climbed for every one that dropped.

The gauge has rallied 8.3 percent so far this year. Standard & Poor's 500 Index futures advanced 0.4 percent, while the MSCI Asia Pacific Index increased 0.7 percent.

"There's a lot more scope for earnings numbers to be revised up, particularly as the German economy starts to turn around and there are signs, I think, that the German economy will turn out stronger in 2012," said Peter Dixon, a global equities economist at Commerzbank AG in London, in an interview on Bloomberg Television.

European stocks declined 0.3 percent on Monday after the G20 rejected calls from the eurozone to increase the International Monetary Fund's resources.

Germany's Chancellor, Angela Merkel, won a parliamentary vote on Greek aid after the close of European trading on Monday. She warned lawmakers that pushing Greece out of the euro risked "incalculable" damage.

Vote on bailout

In a vote that showed dissent in her coalition has grown, 496 members of the lower house, or Bundestag, voted in favor of the 130-billion-euro ($175 billion) package. Ninety voted against and five abstained.

Merkel's government pushed through the measure to prevent Greece's economy from collapsing.

Greece's credit ratings were cut to "selective default" by S&P after the Mediterranean nation negotiated the biggest sovereign-debt restructuring in history.

S&P lowered Greece's rating from CC, two levels above default, after the government added clauses to its debt designed to include investors unwilling to take part in the exchange, the New York-based company said in a statement on Monday.

German consumer confidence will increase to a 12-month high in March as falling unemployment boosts income expectations, GfK SE said.

The Nuremberg-based market research company forecast on Tuesday that its consumer-sentiment index, based on a survey of about 2,000 people, will rise to 6 from 5.9 in February.

That would be the highest level since March last year and match the median forecast in a Bloomberg News survey of 23 economists.

US durable goods

In the United States, orders for durable goods fell 4 percent in January, the most in three years.

Bookings for goods meant to last at least three years fell 1 percent after a 3 percent increase in December, according to the median forecast of economists surveyed by Bloomberg News.

Peugeot surged 7 percent to 16.38 euros after people familiar with the matter said that the French carmaker may announce plans to sell a stake of 7 percent in the company to General Motors.

The deal would include a standstill agreement under which GM would not take a greater holding in the Paris-based carmaker without permission, said the people, who asked not to be identified because the talks are private.

Peugeot may offer additional shares through a rights issue as part of the transaction, the people said.

Cove Energy PLC advanced 3.5 percent to 2.43 pounds ($3.85) after the Times of India reported that Oil & Natural Gas Corp and GAIL India Ltd may offer $2 billion for the company, outbidding PTT Exploration & Production PLC and Royal Dutch Shell PLC.

The Indian companies may submit a joint bid this week after getting approvals from the government, according to the newspaper report.

Bloomberg News

European stocks advance as Germany votes for Greece bailout