GLOBAL MARKETS-Stocks rally on euro rescue plan; euro still down
NEW YORK, Oct 26 (Reuters) - U.S. stocks rallied on Wednesday on news that euro zone leaders plan to boost the power of the region's bailout fund, while the euro fell as investors awaited details that will not be forthcoming until next month.
"Even when the plan is laid out, it does not necessarily mean that everything from then on will be very smooth. Volatility will continue in the markets," said James Barnes, senior fixed-income manager at National Penn Investors Trust Company in Wyomissing, Pennsylvania.
EU Sets 50% Greek Writedown, $1.4T in Fund
European leaders persuaded bondholders to take 50 percent losses on Greek debt and boosted the firepower of the rescue fund to 1 trillion euros ($1.4 trillion), responding to global pressure to step up the fight against the financial crisis. Ten hours of brinkmanship at the second crisis summit in four days delivered measures that the euro area’s stewards said point the way out of the debt quagmire, even if key details are lacking. Last-ditch talks with bank representatives led to the debt-relief accord, in an effort to quarantine Greece and prevent speculation against Italy and France from ravaging the euro zone and wreaking global economic havoc. “The world’s attention was on these talks today,” German Chancellor Angela Merkel told reporters in Brussels at about 4:15 a.m. today. “We Europeans showed tonight that we reached the right conclusions.”
EFSF Bailout Fund Will Be Worth $1.4 Trillion: Sarkozy
French President Nicolas Sarkozy estimates the euro region’s bailout fund will be worth $1.4 trillion after European governments agreed on steps to leverage existing guarantees by as much as five times. He spoke to reporters after a summit of European leaders in Brussels.
Sarkozy Said to Plan Plea to China for EU Fund
French President Nicolas Sarkozy plans to call Chinese leader Hu Jintao tomorrow to discuss China contributing to a fund European leaders may set up to bolster their debt-crisis fight, said a person familiar with the matter. The investment vehicle was one of the options being considered by European leaders at a summit tonight to expand the reach of its 440 billion-euro ($612 billion) European Financial Stability Facility. Sarkozy’s plea to his Chinese counterpart would come the day before a planned visit to Beijing by Klaus Regling, chief executive officer of the EFSF, to court investors.
South Korea’s Economic Growth Slows as Spending Cut on Europe Debt Crisis
South Korea’s economy grew at a slower pace in the third quarter as companies cut spending on concern that Europe’s debt crisis and a faltering U.S. economy will hurt business. Gross domestic product expanded 0.7 percent from the second quarter, when it gained 0.9 percent, the central bank said in Seoul today. That compares with the median 0.6 percent estimate of 12 economists surveyed by Bloomberg News. “The economy seems to be holding up although it’s too early to get a clear picture of where it’s heading until we see how the European debt situation pans out,” said Lee Sang Jae, an economist at Hyundai Securities Co. in Seoul. “But slower growth will add pressure on the central bank not to hike interest rates any more this year.”
COMMODITIES-As pivotal EU summit awaited, markets diverge
NEW YORK, Oct 26 (Reuters) - Commodity markets diverged in tense but inconclusive trade on Wednesday, with gold extending gains for a fourth day while oil and grains fell as traders awaited the conclusion of a pivotal European summit.
"Investors have Europe fatigue right now. We are getting down to the deadline and we are seeing a little caution set in," Michael Gross, futures analyst with Optionsellers.com in Tampa, Florida, said of the copper market.
Oil falls as U.S. crude stocks rise
NEW YORK, Oct 26 (Reuters) - Oil prices fell on Wednesday as concerns about rising U.S. inventories added to caution about Europe's ability to agree on a plan to address the debt crisis.
"The crude build was a lot larger than people expected and you saw rising imports and we have the uncertainty about Europe putting a little uncertainty in the market," said Gene McGillian, energy analyst for Tradition Energy in Stamford, Connecticut.
Natural gas ends down ahead of EIA data
NEW YORK, Oct 26 (Reuters) - U.S. natural gas futures ended lower on Wednesday, as traders shrugged off any storm concerns and focused instead on what should be another big weekly inventory build the following day.
"No one expects the storm to do anything, and expectations are for a bearish EIA number (storage build) tomorrow, but the longer-term weather outlook still looks supportive," a Midwest trader said, adding cooling temperatures later this week and next week should put a temporary floor under prices.
Euro Coal - Prices slip, oil fall adds to rate woes
LONDON, Oct 26 (Reuters) - Prompt physical coal prices were weaker on Wednesday with a South African cargo falling at least 70 cents a tonne in thin trading and sentiment also hit by a fall in the oil market.
"It has been moving and there is not a huge amount of buying interest knocking around in the market," one European coal trader said. "Everything else like oil also seems to be lower today."
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