Spain credit boost buoys European shares
Updated: 2012-10-17 19:49
LONDON- European shares rose for a third consecutive session on Wednesday after Spain clung onto its top grade credit rating, bolstering expectations the euro debt crisis can be contained.
The FTSEurofirst 300 index rose 0.2 percent to 1,115.20 points by around midday, while the euro zone Euro STOXX 50 index advanced 0.5 percent to 2,560.89 points.
Spain remains under pressure to accept a sovereign bailout to help it deal with its debt burden.
Late on Tuesday, credit rating agency Moody's affirmed Spain's investment grade rating, assuaging widespread fears that Spain could be cut to 'junk' status, although it based its decision on the assumption that Madrid would ask for help in holding down its borrowing costs.
Although uncertainty remains over the timing of any Spanish request for a bailout, traders and investors said sentiment surrounding fixes to the euro zone debt crisis was improving.
"With so much focus on the toxic area of Europe, if we do get some signs of light at the end of the tunnel, we could be set for a better tone," said Richard Robinson, a European equities fund manager at British firm Ashburton.
Spain's IBEX stock market rose 1.5 percent as the Moody's decision pushed Spanish government bond yields down to their lowest level since early April.
Spanish banks Santander and BBVA were also among the stocks adding the most points to the FTSEurofirst 300 index, rising by 2.5 and 3.9 percent respectively.
Robinson said he had recently added Spanish bank Bankinter
to his portfolio, along with Italian bank Intesa , on prospects of an improvement in the euro zone's economic problems which have also put pressure on Italy.
"Spain is in a better place for now," he said.