The markets and financial analysts welcomed the
decisions taken by the European Union to tackle its debt crisis on
Thursday, with stock and oil prices jumping and the ruble
strengthening.
"In a few months we will see the
phase when the debt crisis is under control, which means the
'patient' will be on rehabilitation," said Metropol investment
house senior analyst Mark Rubinstein.
European leaders agreed the enlargement of the
European Financial Stability Fund to up to 1 trillion euros, from
the previous limit of 440 billion euros. They also reached a deal
with private creditors to write off 50 percent of Greece’s debt in
exchange for over a 100 billion euro recapitalization. Banks will
be required to seek additional funding to raise capitalization to 9
percent by June 2012.
In a move which considerably boosted market
sentiment, Belgium's Finance Minister Didier Reynders said China,
the world's second largest economy, was ready to contribute to the
fund.
"Investors considered this a satisfactory result
of the summit," said Finam analyst Zarina Saidova.
European stocks surged to a 12-week high and the
euro reached its highest level against the dollar in seven weeks
following the deal. In Russia, the ruble firmed both against the
dollar and the euro, approaching levels where the central bank
would be set to intervene. Brent blend oil gained $2.15 to $111.06
per barrel, while the WTI added $2.51 to $92.71.
Russian stocks reacted buoyantly, the RTS
climbing 4.52 percent to 1,599.20 and the MICEX up 2.84 percent to
1,542.20 by 5:00 pm Moscow time on Thursday.
"The decisions taken at yesterday's summit are
truly fundamental: recapitalization of major banks will help avoid
serious shocks in the financial sector if the economic situation
worsens, the 50 percent Greek debt write off will boost market
confidence in the future, as the risks of a default there will be
much reduced," Investcafe analyst Anna Bodrova said.
The real effect of the anti-crisis plan would
only be seen in a few years however, when the eurozone economy
began functioning independently, she said.
"Recapitalization of banks and increasing
reserve requirements is generally a very sound move from a
strategic point of view, because the risks for the banking sector
are quite high, mostly due to junk bonds on the banks' balance
sheets," Bodrova said, adding that the EU needed to create a single
economic center responsible for the reforms as soon as
possible.
EU President Herman Van Rompuy said tafter the
summit that the EU had new ideas about budget and fiscal control
and the European Commission will prepare a preliminary program by
December.
"On the eve of the summit, the question was
about new approaches to monetary management in the eurozone. If
these measures are implemented in 2012 taking into account previous
mistakes, we can say that this kind of crisis will not happen again
in the future," Bodrova said.
http://en.rian.ru/business/20111027/168172703.html