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US ISM data boosts risk assets

European stocks got off to a decent start to the final quarter of 2012, possibly on the back of weak Chinese data over the weekend that could pave the way for more easing measures supportive of risk assets. The manufacturing purchasing managers index (PMI) rose to 49.8 in September from 49.2 in August, showing contraction for the second successive month albeit to a less severe degree.

Closer to home, there was probably an element of support from the results of Spanish bank stress which were released post-market close on Friday. The reports, conducted by consulting form Oliver Wyman, showed that Spain’s banks had capital deficits of €59.3 billion, generally below worst case estimates. For now at least, the estimated figure is well within the €100 billion of bailout money that Spain has secured. The tests

Markets made noticeable gains later on in day, when the US’s Institute of Supply Management (IMS) manufacturing PMI came in at 51.5 for September, back into positive territory from the 49.7 in August. The FTSE 100 finished the day up 1.4% at 5820, with the French CAC40 up 2.4% and major indices trading around close to 1% higher at the time of writing.

Whilst financials and mining companies generally led the UK index higher, one of the major UK corporate news stories was that the mining group Xstrata move closer to the proposed merger with commodity trading group Glencore. It followed work over the weekend during which Xstrata’s board devised a structure that would allow different routes for shareholders to accept the deal without necessarily supporting the huge payouts designed to retain the group’s senior management following the merger. Xstrata finished the day up 2.4% at 980p, with Glencore finishing the day marginally lower.

This was posted in Bdaily's Members' News section by James .