The German market is in positive territory in afternoon trading Tuesday, after data showed an unexpected improvement in consumer morale, amid concerns that the meeting of European leaders in Brussels later in the week may not produce any strategy to contain the debt crisis in the region.
Demand for Spanish short-term debt declined on Tuesday, while the country's borrowing costs continued to climb at an auction. The Spanish Treasury raised 3.08 billion euros from the sale of its 3- and 6-month bills. The target set for the auction was between 2 billion euros and 3 billion euros.
The auction came a day after Moody's Investors Service downgraded the long-term debt and deposit ratings for 28 of the 33 rated Spanish banks and two issuer ratings, citing the reduced creditworthiness of the Spanish sovereign, and the expectation that the banks' exposures to commercial real estate would likely cause higher losses.
Italy also saw its borrowing costs climb to the highest level since December at a short-term debt auction, reflecting doubts among investors about the outcome of the upcoming European summit.
The Euro Stoxx 50 index of eurozone bluechip stocks is adding 0.27 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is gaining 0.37 percent.
The DAX index opened higher and despite some weakness later on, is currently adding 0.12 percent.
RWE is gaining 2.6 percent and E.ON is adding 2.4 percent. Merrill Lynch upgraded both stocks.
Fresenius is climbing 1.8 percent. Deutsche Telekom and Deutsche Boerse are advancing 1.2 percent and 1.1 percent, respectively.
Deutsche Bank is rising 1.4 percent while Commerzbank is losing 0.5 percent.
BMW is declining 3.1 percent. Citigroup cut the stock to "Neutral" from "Buy." Volkswagen and Daimler are falling 2 percent and 1.7 percent, respectively.
Infineon Technologies and HeidelbergCement are falling 1.4 percent each.
Elsewhere in Europe, the French CAC 40 is rising 0.04 percent and the UK's FTSE 100 is gaining 0.13 percent. However, Switzerland's SMI is losing 0.11 percent.
In economic news, German consumer morale is set to improve in July as rising income expectations outweighed concerns over escalating tensions in Eurozone, the latest survey results from the market research group GfK showed.
Uncertainty surrounding the Greek elections and the Spanish banking rescue at the time of the survey, nonetheless, dampened Germans' economic expectations in June to a 6-month low.
Across Asia/Pacific, markets fell broadly as concerns persisted about the EU summit. Australia's All Ordinaries fell 0.4 percent, China's Shanghai Composite Index edged down 0.1 percent and Japan's Nikkei 225 lost 0.81 percent. However, Hong Kong's Hang Seng added 0.5 percent.
In the U.S., futures point to a higher open on Wall Street. In the previous session, lingering concerns about the ongoing European debt crisis weighed on the markets. The Dow fell 1.1 percent, the Nasdaq tumbled 2 percent and the S&P 500 slid 1.6 percent.
In the commodity space, crude for August delivery is rising $0.09 to $79.30 per barrel while August gold is falling $3.0 to $1585.4 a troy ounce.
by RTT Staff Writer
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