European stocks buoyed by BP oil spill fund deal, successful Spanish bond sale

European stocks buoyed by BP, Spanish bond sale

MILAN — European stocks rose Thursday after Spain’s successful bond sale shored up the euro, while Wall Street slipped on higher-than-expected jobless claims.

European investors breathed a sigh of relieve after Spain raised nearly €3.5 billion ($4.3 billion) in an oversubscribed sale of bonds, although at higher interest rates. The government also promised to reveal results of stress tests on individual banks. That helped drive the euro up 0.7 percent to $1.2385.

“Spanish policymakers seem to perform better under pressure than Spain’s football team so far: today’s debt auction went well, Finance Minister Salgado confirmed that bank stress tests will be published on an individual institution basis, and the government has pushed through by decree a set of labor market reform measures,” said Unicredit chief economist Marco Annunziata, alluding to European champion Spain’s loss to Switzerland in the World Cup.

Annunziata said the moves could bolster confidence in Spain’s ability to fix its finances — and also raises the stakes for other countries in the euro zone.

In Europe, Britain’s FTSE 100 closed up 0.3 percent at 5253.89, Germany’s DAX rose 0.53 percent to 6223.54 and France’s CAC-40 grew by 0.19 percent to 3683.08.

The Dow Jones industrials were down 43 at 10,366. The Standard & Poor’s 500 index is down 4 at 1,110, while the Nasdaq composite index is up 7 at 2,2983.

The euro rose to $1.2391 from $1.2314 in New York late Wednesday as the Spanish auction showed the country could still raise money on markets despite worries about its large debt load and its ability to enforce austerity measures.

Momentum was earlier boosted by news that oil company BP had reduced uncertainty about its liabilities with a deal to cancel dividend payments and set up a $20 billion fund. Its shares were up 9.4 percent at 368.7 pence ($5.42) in London.

But David Jones, Chief Market Strategist, IG Index warned that analysts still see risk in BP shares “suggesting this latest rebound may not be the final twist in the tale.”

Positive economic data from Britain also helped drive markets. Retail sales in Britain rose 4.4 percent in the year to May, while vehicle production soared by 59 percent, signs that the country’s recovery from a deep recession is continuing for the third consecutive quarter.

Looking ahead, investors were watching an EU summit in Brussels, where the European Union’s president called on the leaders of the bloc’s 27 states to tackle long-term problems with their economies and overhaul budget rules.

In Asia, Japan’s Nikkei 225 stock average dropped 67.75 points, or 0.7 percent, to 9,999.40 as investors moved to lock in gains from Wednesday’s 1.8 percent jump, when the index finished above the key 10,000 level for the first time in almost a month.

Australia’s S&P/ASX 200 lost 0.7 percent to 4,527.30 as miners retreated. The Shanghai Composite index fell 0.4 percent to 2,575.30 with investors holding back ahead of the launch of Agricultural Bank of China’s mammoth share listing, after a five-day closure for public holidays.

Benchmarks in Singapore and New Zealand were also in negative territory.

Meanwhile, Hong Kong’s Hang Seng rose 0.4 percent to 20,138.40. Stocks in Taiwan, Thailand, Malaysia and South Korea rose as well.

Overnight in New York, the Dow Jones industrials rose 0.05 percent to 10,409.46 after news of BP’s funding agreement. The market began the day by falling on news that home construction and applications for building permits slumped in May.

The S&P 500 fell 0.06 percent to 1,114.61.

In currencies, the dollar weakened to 91.25 yen from 91.37 yen late Wednesday.

Benchmark crude for July delivery was down 31 cents at $77.36 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 73 cents to settle at $77.67 on Wednesday.