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European stocks rallied to the highest in 12 weeks after the region’s leaders agreed to expand a bailout fund to halt the sovereign debt crisis. European leaders persuaded bondholders to take 50 percent losses on Greek debt and resolved to increase the size of the rescue fund, responding to global pressure to step up the fight against the financial crisis. The euro area’s stewards said the plan points the way out of the debt quagmire, even if key details are lacking. Last- ditch talks with bank representatives led to the debt-relief accord, in an effort to quarantine Greece and prevent speculation against Italy and France from ravaging the euro area and wreaking global economic havoc. Measures include recapitalization of European banks, a potentially bigger role for the International Monetary Fund, a commitment from Italy to do more to reduce its debt and a signal from leaders that the European Central Bank will maintain bond purchases in the secondary market.
The U.S. economy grew in the third quarter at the fastest pace in a year as gains in consumer spending and business investment helped support a recovery on the brink of faltering. Gross domestic product rose at a 2.5 percent annual rate, matching the median forecast of economists surveyed by Bloomberg News and up from a 1.3 percent gain in the prior quarter, Commerce Department figures showed today in Washington. Household purchases, the biggest part of the economy, increased at a more-than-projected 2.4 percent pace.
National benchmark indexes gained in all of the 18 western European markets. Germany’s DAX jumped 5.4 percent, its biggest increase since April 2009. France’s CAC 40 climbed 6.3 percent and the U.K.’s FTSE 100 rose 2.9 percent.
BNP Paribas SA, France’s biggest bank, and Deutsche Bank AG, Germany’s largest, surged at least 15 percent as policy makers decided to boost the firepower of the European rescue fund to 1 trillion euros ($1.4 trillion). Societe Generale SA, France’s second-largest lender, jumped 23 percent to 23 euros. The bank said it will meet mid-2012 capital requirements “through its own means.” Credit Agricole SA, France’s third-biggest bank, soared 22 percent to 5.94 euros, its largest advance since September 2008.
National Bank of Greece SA, the country’s biggest lender, surged 6.1 percent to 1.91 euros. Alpha Bank SA soared 3.9 percent to 1.08 euros. EFG Eurobank Ergasias increased 7 percent to 76 euro cents. Greek Prime Minister George Papandreou said the government may buy shares in some Greek banks as a result of the planned writedown of the country’s debt and the European accord to recapitalize lenders. Papandreou didn’t give any details on the banks that would be targeted in any nationalization program or the size of any potential shareholdings.
Michelin & Cie. jumped 5.1 percent to 54.94 euros. The world’s second-largest tiremaker said third-quarter revenue rose 11 percent to 5.14 billion euros, spurred by a rebound in demand from U.S. automakers and strong sales of its winter tires in Europe.
Daimler AG added 3.1 percent to 39.07 euros. The world’s third-largest maker of luxury vehicles advanced after predicting higher fourth-quarter profit on gains at its trucks and vans divisions.
Logitech International SA, the world’s largest maker of computer mice, rallied 16 percent to 8.94 Swiss francs, its biggest increase since October 2007. The company confirmed its full-year guidance after three profit warnings in the past seven months.
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