AFP/London
European stocks soared yesterday after a German court ruling approved eurozone bailouts giving investors a hope that a solution to the debt crisis may yet be found. The gains in Europe, a day after global markets had tumbled, were helped along by a strong opening on Wall Street a day before a key speech by US President Barack Obama in which he is expected to announce fresh measures to boost employment and stave off recession. The euro also benefited, climbing to $1.4057 from $1.3992 late in New York on Tuesday. The dollar fell to ¥77.38 from ¥77.68 on Tuesday. London’s FTSE 100 index of leading companies climbed 3.14% to 5,318.59 points. In Paris, the CAC 40 jumped 3.63% to 3,073.18 points and in Frankfurt the DAX rose 4.07% to 5,405.53 points. Milan rose 4.24%, Brussels 2.8%, Madrid 2.77%, Swiss stocks 2.5% and Lisbon 2.16%. The Athens stock exchange’s main index closed up 7.98%, cheered by government pledges to speed up privatisation and reforms days after EU and IMF representatives cut short a visit to determine whether to grant more bailout aid. “A ruling in the German Constitutional Court to reject a series of lawsuits aimed at blocking German participation in eurozone bailouts was well received by the market,” said Joshua Raymond, chief market strategist at City Index. Germany’s top court ruled yesterday that aid for Greece and rescues for other eurozone countries were legal, throwing out complaints lodged by euro sceptics. However, the court also said that parliament must have greater say in any future bailouts and in so doing probably set the stage for a tougher approvals for any new rescues decided by the German executive. In the landmark ruling, the Constitutional Court said all “large-scale” future aid packages must be approved by the parliament’s budget committee, a process sure to create nervousness on markets, where speed is vital. The court ruling comes at a time of high political tension in Europe’s other major economies over the debt crisis, with governments struggling to get deep reform and austerity measures through parliament. Investors were also still absorbing Tuesday’s shock move by the Swiss National Bank when it announced a minimum exchange rate of 1.20 francs per euro, saying the high value of the franc was a threat to the economy. On the European sovereign bond market, yields for Italy and Spain fell. The Spanish benchmark 10-year bond slipped under 5% to 4.981%, down from 5.166%, and Italy’s 10-year dropped to 5.24% from 5.48% the day before. Germany bond yields still remained extremely low, at 1.904%. In midday trade on Wall Street, the Dow Jones Industrial Average jumped 1.61% to 11,318.14, the broader S&P 500 climbed 2.02% to 1,188.75, while the tech-heavy Nasdaq Composite gained 2.10% to stand at 2,525.81.