FTSE, CAC DAX to Open Higher After ECB Loan Bonanza

European stocks were called higher on Thursday, despite doubts over how much of the money banks raised from an inaugural long term European Central Bank (ECB) tender will actually flow into struggling euro zone economies and restore confidence.


The FTSE is called 19 points higher, the CAC40 15 points higher and the DAX 22 points higher in what was expected to be a light trading day with only two days trading before the Christmas holiday.

Banks gobbled up nearly 490 billion euros ($639 billion) in three-year cut-price loans from the ECB on Wednesday, easing immediate fears of a credit crunch.

Following a string of failed attempts by euro zone leaders to thwart market attacks on the bloc's weaker members, hopes of crisis relief before the year-end had been pinned on a massive uptake of the ECB's ultra-long and ultra-cheap loans.

The near half a trillion euro take-up of ECB fundsexceeded almost all forecasts and represented the most the bank has ever pumped into the financial system. A total of 523 banks borrowed from the ECB yesterday.

Spain’s newly elected conservative Prime Minister Mariano Rajoy named Luis De Guindos Finance Minister. De Guindos is a well-known former deputy finance minister who held various economic positions in the government of conservative prime minister Jose Maria Aznar between 1996-2004. He will spearhead his government's efforts to pull the euro zone's fourth largest economy out of its worst crisis in decades.

Rajoy's cabinet formation comes just over a month after his Popular Party won a landslide victory in general elections, making Spain the third ailing euro-zone economy to see a change of government in recent months after administrations in Italy and Greece collapsed over their inability to push through the economic reforms demanded by the European Union and financial markets.

Fitch Ratings said the outlook for Nordic banks is relatively stable next year, though any change in the outlook would more likely be negative than positive.

It predicted banks in the Nordic region will have resilient fundamental financial positions despite the economic uncertainty in Europe, as Fitch expected relatively healthy growth to continue in Nordic domestic economies.

In other news the Financial Timesreported that one of the most prominent hedge funds holding Greek bonds has threatened legal action against officials negotiating the country’s debt restructuring if losses are too deep. Madrid-based Vega Asset Management, an original member of a steering committee for bondholder negotiators, wrote to fellow investors this month to say that it would consider suing if Greece insisted on write downs of more than half the net present value of the debt.

Europe's highest court gave unreserved backing on Wednesday to an EU law to charge airlines for carbon emissions on flights to and from Europe, a decision likely to escalate tension with trading partners, especially the United States.

The court ruled against a group of U.S. airlines that had challenged a law requiring that all airlines flying to and from European Union airports will have to buy permits under the EU's emissions trading scheme from Jan. 1. The initial cost is expected to be minimal but would rise to an estimated 9 billion euros ($11.8 billion) by the end of 2020.

The Wall Street Journal meanwhile reported on Thursday that two hedge funds filed a lawsuit accusing a Deutsche Bank unit of reneging on a $1 billion deal to buy their claims for losses in Bernard Madoff's Ponzi scheme.

The suit, filed in a New York federal court by Kingate Global Fund and Kingate Euro Fund , is a sign of the negative consequences of recent court decisions against the trustee overseeing the bankruptcy of Madoff's firm.

There is no economic data of note on the calendar for Thursday.