Thanks for the help
A new offer of help, this time directed at US municipal debt insurers, enlivened markets on Tuesday, returning some lost optimism to investors.13 February 2008
MADRID - A new offer of help, this time directed at US municipal debt insurers, enlivened markets on Tuesday, returning some lost optimism to investors.
The Ibex 35, which was struggling to remain flat in early trading, surged in the afternoon, climbing 3.4 percent to recover the 13,250-point mark.
The upward impetus was provided by US billionaire Warren Buffet who announced a plan to reinsure US municipal debt insured by struggling insurance companies. He said his Berkshire Hathaway holding company would offer a second line of insurance covering up to USD 800 billion.
Though that in itself was good news for a segment of the US economy, more importantly for many investors it provided confirmation that the invisible hand of the market will offer up a solution to any problem.
Sentiments turned so upbeat, in fact, that the optimism helped cast off downright gloomy results from General Motors, which said it lost USD 38.7 billion last year and will lay off 74,000 employees. Investors liked the restructuring plan and GM shares were trading higher in the middle of the session.
European investors were given an additional boost by data from Germany showing that the ZEW institute's index of business expectations, though still in negative territory, recovered 2.1 points in February from January.
The combination of good data gave investors the support they had been looking for since the end of January to put markets on an upward tack, although it remains to be seen whether the run will continue and allow the Ibex 35 to consolidate its current position above 13,000 points.
Market turnover amounted to EUR 5.25 billion, EUR 1 billion more than on Monday.
[Copyright EL PAÍS / RAFAEL VIDAL 2008]
Subject: Spanish news