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European markets welcome U.S. deal

Monday, August 01, 2011 - 01:35

Aug. 1 - European shares have broken the previous week's sharp losses after a deal was announced to raise the borrowing limit in the United States before it runs out of credit. Andrew Potter reports.

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It's been a nervous wait. European markets hoping the United States could break a political deadlock take steps to tackle its debt crisis. With a last minute compromise finally reached markets like Germany's showed instant improvement. Stefan Scharffetter is a trade for Baader Bank in Frankfurt. SOUNDBITE: STEFAN SCHARFFETTER, TRADER FOR BAADER BANK, SAYING (German): "We have a bit of breathing space now in Europe. It becomes a bit easier to plan; another financial liability with over extensions, especially from the Americans, would have been too much for European markets." Banks had the biggest gains across Europe. Investors also showed a returning appetite for riskier assets. That saw that price of gold fall slightly after the safe haven reached record highs. It might not last, with many thinking the U.S. hasn't done enough to avoid an eventual downgrade of its Triple A credit rating, which is likely to spark a ripple effect felt in Europe and around the globe. Nick Parsons is Global Strategist in London with National Australia Bank. SOUNDBITE: NICK PARSONS, GLOBAL STRATEGIST, NATIONAL AUSTRALIA BANK, SAYING (English): "The ratings agencies were talking about wanting to see tax increases of the order of two trillion and as far as we can see in the small print of this there are no tax increases at all here. So the reductions is all going to come on the spending side." Across the markets London's FTSE100 was up 1.3 percent by midday Monday, the German DAX adding 0.7 percent with the French CAC up 0.8. The euro also gained ground against the dollar. Andrew Potter, Reuters

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European markets welcome U.S. deal

Monday, August 01, 2011 - 01:35