Shawshank, VA 9/27/2011 (PennyPayDay) – In a triumph of hope over experience, investors are snapping up shares on expectations that European leaders will come up with a solution to the Eurozone debt crisis that will simultaneously please the markets and their respective electorates. US broadcaster CNBC said this morning that it has had confirmation from European officials that they are working on a plan to shore up European bank stability by using the European Financial Stability Fund to capitalise a special purpose vehicle (SPV) that would be created by the European Investment Bank.
The SPV would issue bonds and then use the funds from the bond sales to purchase the debt of distressed European states; the bonds could also then be used as collateral for borrowing from the European Central Bank.
As was the case yesterday, financial stocks are the ones to own today. French lenders BNP Paribas, Societe Generale and Credit Agricole plus investment bank Natixis lead Paris higher while German banks Deutsche Bank and Commerzbankcarry the flag for Frankfurt, along with insurer Allianz.
The Paris CAC is 109 points firmer at 2,968 while the DAX in Frankfurt is 214 points higher at 5,560.
German car maker Daimler is putting the pedal to the metal after it was upgraded to "outperform" from "neutral" by Credit Suisse. The Swiss bank likes Daimler's €8bn cash pile and the scope the German luxury car maker has to squeeze employment costs.
Elsewhere in the German automobile sector, Volkswagen has been given regulatory clearance to go ahead with its takeover of lorry maker MAN SE.
Power equipment maker Alstom is humming along after Morgan Stanley issued a positive broker note. The broker has an "overweight" rating for Alstom. In other broker action, Sanford C. Bernstein has upgraded wind turbine makerVestas to "market perform" from "underperform".
Swiss drugs leviathan Novartis is another celebrating receiving regulatory approval. The Japanese authorities have given the thumbs up for the marketing of two drugs in Japan: multiple sclerosis treatment Gilenya and cryopyrin-associated periodic syndrome (a group of rare inherited auto-inflammatory conditions) treatment Illaris.
The group has also had a result with its Seebri drug, as tests showed it improved the functioning of the lungs for smokers. Based on these findings, Novartis intends to seek regulatory approval for the drug to be released in Europe.
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