London - Arabstoday
Slightly better economic news from China and Europe countered concerns over the Eurozone debt crisis yesterday, lifting European shares and the single currency, but Greek default fears and a looming debt sale by Spain held gains in check. US stock index futures also pointed to a higher open on Wall Street after the holiday weekend with a number of top companies, including Citigroup Inc, due to report quarterly results. German investor sentiment posted its biggest ever monthly improvement in January, helped by recent upbeat data and hopes the European Central Bank\'s efforts to ease the region\'s debt problems. Policy easing The German data followed earlier numbers from China showing a much-feared slowdown in the world\'s second-largest economy was not as great as some had expected and still kept alive hopes for more policy easing measures from the government. \"Investors are happy to look through any longer term worries about Greek debt, and are anticipating some significant policy easing in China after the data released yesterday to boost global activity into the spring of 2012,\" said Andrew Milligan, head of global strategy at Standard Life Investments. The strong reading on German business sentiment, while encouraging, still indicated tough times ahead for the Eurozone\'s largest economy, economists said. While the ZEW sentiment index improved markedly, it remained in negative territory. \"The [ZEW] index is still consistent with a majority of investors expecting economic conditions to deteriorate in future,\" Ben May of Capital Economics said. Sentiment also got a lift from data showing Eurozone consumer prices fell more than expected in December, the start of a retreat from a November peak that could give the European Central Bank more room to cut interest rates as the economy heads for recession. European shares hit five-month highs after all the economic data, to be up 0.9 per cent at 1,032.45 points. The MSCI world equity index gained by around 0.8 per cent after rising during Asian trade on the Chinese data. But behind the brighter economic sentiment, worries remain about the prospects of a Greek debt default, which some fear could happen as soon as March when €14.5 billion (Dh68 billion) of bond redemptions fall due. Awash with money A growing number of experts, including some from ratings agencies, have warned a default was on the cards after Greece\'s talks with creditors broke down on Friday. \"It is going to happen. Greece is insolvent so it will default,\" Edward Parker, Managing Director for Fitch\'s Sovereign and Supranational Group in Europe, the Middle East and Africa told Reuters. Reflecting concerns over the outlook, commercial banks parked over half a trillion euros at the European Central Bank, the highest on record, as the mix of debt crisis worries and a recent giant injection of ECB cash left banks awash with money but too scared to lend it. But a strong response to a Spanish Treasury bill auction on Tuesday eased some debt market concerns ahead of Madrid\'s auction of bonds with maturities up to 10 years on Thursday. Despite a two-notch cut in its rating by Standard & Poor\'s, the Spanish auctions should benefit from support from banks flush with European Central Bank cash and the market\'s view that the new government is serious about addressing its economic woes. The ECB tender was a factor in a strong sale last week in which Spain perked up debt markets by selling €10 billion of bonds, twice the amount it targeted, at falling yields. Weak fundamentals forgotten - €14.5b: Greek bonds due in March - 1,032: points five-month high touched by shares - 0.8%: rise in MSCI world equity index