Europe Economy

FTSE, DAX, CAC 40 to Open Higher After EU Summit Deal


European stocks were called to open higher on Monday after markets were buoyed in Asia overnight and Wall Street on Friday by an agreement reached by European leaders for greater fiscal unity within the euro zone.

The FTSE is called 12 points higher, the DAX in Frankfurt is expected to open up by 23 points and the CAC 40 is called higher by 10 points.

In Asia overnight, stocks and the euro held steady as optimism continued following the meeting of European Union leaders on Friday. As many as 26 of the 27 member states of the EU could sign up to a Franco-German plan for greater fiscal unity to tackle the debt crisis in the euro zone, but concerns are growing that markets might not stay calm for long.

German Finance Minister Wolfgang Schaeuble seemed to acknowledge the need for swift action by governments to approve the agreed measures, telling German broadcaster ZDF that "a lot of uncertainty remains" and "most of all we have to implement quickly what was agreed."

British Prime Minister David Cameron was the one EU leader who vetoed a change to EU treaties on Friday and Britain now stands alone as the only nation within the European Union with no plans to approve stricter budget controls within the euro zone.

Cameron will face the British parliament on Monday following a weekend of heavy criticism by his pro-European Liberal Democrat coalition partners, the heaviest of which came from Deputy Prime Minister Nick Clegg.

Hungary will begin parliamentary discussions this week on whether to back the new fiscal measures proposed by German Chancellor Angela Merkel and French President Nicolas Sarkozy.

Prime Minister Viktor Orban seemed to align himself with Britain, another non-euro zone EU nation at last week's summit, but he claimed any approval of the Franco-German plans would have to be discussed by the Hungarian parliament.

Hungary joins Sweden and the Czech Republic as EU nations outside the single currency area likely to discuss the fiscal agreement within their national parliaments in the coming weeks.

Outgoing European Central Bank chief economist Juergen Stark is reported in Sueddeutsche Zeitung on Monday as saying that he believes it would be a mistake to further involve the IMF in the European Union.  Stark told the German newspaper that major engagement of the IMF in Europe would be "an act of desperation".

The Financial Times reported on Sunday that the OECD will warn in an upcoming report that markets and governments will find it increasingly difficult to secure financing as market volatility continues in 2012.

The FT claims that the report will also warn that investors may no longer consider troubled nations to be risk free and industrialized nations are likely to increase borrowing levels next year.

The UK financial regulator the Financial Services Authority (FSA) will release a report on Monday which is expected to heavily criticize its own failings in for not preventing the Royal Bank of Scotland from having to seek a government bailout in 2008.

RBS sought a £45 billion ($70.3 billion) bailout from the UK government at the height of the financial crisis after an aggressive expansion policy left the bank on the brink of bankruptcy.

British Prime Minister David Cameron is expected to make a statement to parliament on Monday afternoon following the EU summit on December 9 and the so-called 'troika' of lenders to Greece will arrive in Athens on Monday to discuss the conditions of the latest bailout.

Italy, France and the Netherlands will all hold bond auctions on Monday, with Italy expected to auction off 7 billion euros ($9.3 billion) of 12 month bills at 10:00am UK time.

The Netherlands will also begin a sale of 3.5 month to 6.5 month bills at 10:00am.

The French auction follows at 1:50pm London time.

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