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Future Advance After EU Summit Agreement

CNBC.com and Reuters
Friday, 29 Jun 2012 | 8:42 AM ET

U.S. stock index futures added to sharp gains Friday after European leaders unexpectedly agreed to take action to bring down Italy and Spain’s borrowing costs and create a single banking supervisory body.

European Union leaders at a summit in Brussels agreed that euro area rescue funds could be used to stabilize bond markets without forcing countries that comply with EU budget rules to adopt extra austerity measures or economic reforms.

The deal had followed Spain and Italy's earlier withholding of support for a growth package. European shares soared to a one-week highfollowing the announcement of the deal.

On the economic front, consumer spending was flat in May for the first time in five months, according to the Commerce Department, while income rose 0.2 percent.

The Institute of Supply Management - Chicago releases its June index of manufacturing activity at 9:45 am ET. Economists polled by Reuters forecast a reading of 52.5, compared with 52.7 in May. A reading above 50 indicates economic expansion.

And the final reading of the Thomson Reuters/University of Michigan Consumer Sentiment Survey for June is due at 9:55 am ET. with economists telling Reuters they expected a reading of 74.1, unchanged from the preliminary figure.

El-Erian: Few Places Safe for Investors
Mohamed El-Erian, Pimco CEO & co-CIO, says it is increasingly inevitable that Greece will exit the euro zone, adding that Spain shows investors are losing confidence in policymakers.

Among earnings, Research In Motion plunged after the embattled BlackBerry maker posted a wider-than-expected quarterly lossand added it would cut 5,000 jobs.

Nike also tumbled after the sports-apparel retailer missed earnings expectations and as margins took a hit from costs and a restructuring charge.

Ford Motors said its international losses will likely triple in the second quarter, citing weakness in European sales.

U.S. securities regulators may force the Nasdaq to upgrade its trading systems following last month's glitch-ridden debut of Facebook , according to a report in the Wall Street Journal.

JPMorgan's internal controls have come under increased scrutiny by regulators who have asked the bank to demonstrate its risk models are working properly, the Wall Street Journal reported.

And JPMorgan’s losses from derivatives trades could amount to between $4 and $6 billion in the second quarter, far more than the original estimate of $2 billion.The bank has now exited from over half of the derivatives positions and will still post a profit in the second quarter.

And UK financial regulator the Financial Services Authority (FSA) announced it had found failings on the part of banks which sold products to protect small businesses against a rise in interest rates.

Lloyds Banking Group, HSBC, RBS and Barclays will have to compensate customers who were sold the products and which suffered “severe impact” to their businesses.

None of the banks told their customers they would face higher payments if interest rates fell significantly or were frozen as happened in the wake of the financial crisis.

Anheuser-Busch InBev has completed the purchaseof the half of Modelo that it didn’t already own in a deal valued around $20 billion.

Alson on the M&A front, Constellation Brands bought the 50 percent of Crown Imports that it didn’t already own from AB InBev. Crown had been a joint venture between Constellation and Modelo.

—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

On Tap Next Week:

MONDAY: ISM mfg index, construction spending, Wal-Mart 50th anniversary
TUESDAY: Factory orders, auto sales; NYSE early close
WEDNESDAY: INDEPENDENCE DAY - Bond, equity markets closed
THURSDAY: Weekly mortgage apps, Challenger job-cut report, ADP employment report, ISM non-mfg index, oil inventories, chain-store sales
FRIDAY: Non-farm payrolls

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