Barclays Plc (BARC) led a rebound in banks after policy makers reached their latest agreement to tackle the debt crisis. Alcatel-Lucent SA increased 5.2 percent after analysts upgraded the company. K+S AG fell after U.S. rival Potash Corp. planned production cuts on weaker demand.
The Stoxx Europe 600 Index rallied 1.1 percent to 240.28 at 12:09 p.m. in London after earlier falling as much as 0.9 percent. The March contract on the Standard & Poor’s 500 Index (SPX) rose 0.9 percent. MSCI Asia Pacific Index still retreated 2 percent after economic data in the region missed economist forecasts.
In Europe, stocks (SXXP) climbed after Reuters reported China is planning to create a new investment vehicle to improve returns on its foreign-exchange reserves. The news agency cited an unidentified person with knowledge of the matter.
The vehicle would operate two funds, one targeting investment in the U.S. and the other focused on Europe, according to the Reuters report.
The benchmark Stoxx 600 earlier swung between gains and losses as investors digested the latest agreement to come out of the European Union Summit in Brussels.
No Big Bazooka
“We still have good intentions but it’s going to take a while for everything to be put on to paper which means a long term with uncertainty in markets,” Carsten Brzeski, an economist at ING Group NV in Brussels, said in an interview on Bloomberg Television. “We still need the big bazooka and we didn’t get the bazooka.”
German Chancellor Angela Merkel said the leaders of the 17 euro nations reached an accord to tighten budget controls and channel 200 billion euros ($267 billion) through the International Monetary Fund.
In an accord hailed by ECB President Mario Draghi, the leaders outlined a new fiscal agreement to prevent future debt run-ups, accelerated the start of a planned 500 billion-euro rescue fund and watered down bondholder loss-sharing provisions.
Stocks fell yesterday after the European Central Bank damped speculation it will step up purchases of government bonds and regulators said lenders must raise more capital than previously forecast. The measure rose 8.7 percent last week on mounting optimism that policy makers would find a solution to the debt crisis at the Brussels summit.
Banks recovered from earlier losses. Barclays rallied 5.7 percent to 190.75 pence, gaining for the first time in four days. Italy’s Intesa Sanpaolo SpA (ISP) rose 5 percent to 1.24 euros and Deutsche Bank AG (DBK) increased 4 percent to 29.28 euros.
Alcatel jumped 5.2 percent to 1.24 euros after Sanford C. Bernstein & Co. raised its recommendation for France’s largest telecommunications equity supplier to “outperform” from “market perform.”
BG Group Plc (BG/) added 1.1 percent to 1,347 pence after Reuters reported the company will sell a part of its Brazilian unit in the coming weeks with China Petroleum & Chemical Corp., known as Sinopec, as the leading candidate. Reuters cited a person with knowledge of the talks.
K+S, Europe’s largest potash producer, dropped 1.7 percent to 35.44 euros. Potash Corp., the world’s largest fertilizer producer by market value, said it plans an eight-week production shutdown at its Lanigan mine starting Jan. 8 and will close the Rocanville facility for six weeks beginning Dec. 25.
The cuts equate to about 1.7 percent of 2012 global demand, Adam Schatzker, a Toronto-based analyst at RBC Capital Markets, said in a report dated today.
Morgan Stanley reduced the 2012 earnings-per-share estimate for K+S by 36 percent, citing forecasts for lower potash demand.