After a bit of uncertainty earlier in Friday’s session, the financial markets decided they did like the fact that a majority of European leaders have agreed to work towards stricter budget discipline, at their crucial summit.
However the fact that the deal was not backed by Britain and was short of any immediate, extra measures to ease the euro zone debt crisis, is keeping investors wary.
Banks, which have been under pressure because of the enormous amount they have lent to peripheral eurozone countries, were the best performers in Europe following the deal; the euro also gained.
“Let’s hope this is the one that resolves the crisis, but I think the gains are only a relief rally,” Andy Lynch, fund
manager at Schroders said. “The implementation is going to be difficult and we are still underweight financials. Banks remain in a difficult place, the European economy is slowing quite sharply and that will result in more bad debts and write downs.”
The markets were cheered by a Reuters report that China’s central bank plans to set up new funds to look for opportunities to invest the equivalent of more than two hundred billion euros in Europe and the United States.