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Stockholm Stock Exchange celebrates EURO agreement and started Thursday trading with a positive outlook

Thursday, 27 October 2011
There was positive feedback on the Stockholm Stock Exchange after last night’s, spending limits discussions in the EU. Stockholm Stock Exchange's general index was up 2.5 percent after a half-hour of trading.

Working into the early hours of the morning, Eurozone officials reached agreements on a host of issues. "At first glance details seem to be lacking in some regards, but there do seem to be firm agreements in place on many key issues; that may well be what matters most to markets (credible structural reforms aside) given that they can still count on the European Central Bank for an effective ‘backstop’ for now," according to analysts at Digital Look.

The Eurozone and the Institute for International Finance (IIF) have agreed on a voluntary ‘haircut’ on Greek debt of 50%, which is expected to allow the country to reduce its stock of debt to 120% of GDP by the year 2020 from 160% now. As well, the Eurozone will offer €30bn in credit enhancements to the private sector in exchange.

An agreement has also been reached on increasing the size of the European Financial Stability Fund. The amount remaining, following aid payments so far to periphery nations, and which is approximately €290bn, will be leveraged by around 4-5 times, producing a headline figure of around €1tn.

A June 30 2012 deadline has been set for lenders to raise their levels of ‘core capital’ to 9% once sovereign debt holdings have been written down, after the European Banking Authority identified a capital shortfall of €106bn after re-valuing market-rate sovereign debt. Banks also have until Christmas day this year to submit recapitalisation plans to national supervisors.

Separately, leaders expressed to Italian Prime Minister Silvio Berlusconi the urgent need to set an “ambitious timetable” to boost economic growth and cut debt. In exchange Berlusconi vowed to raise €5bn annually from asset sales, increase the retirement age and relax labour laws.

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Stockholm Stock Exchange shows happiness on Thursday morning in reaction to the behaviours of the European politicians in their question to bring back confidence into the market.
The Stockholm Exchange's broad index roses 2.5 percent and large cap indices OMXS30 was almost 3 percent after one hour of trading.

Among OMXS30 companies, there are several companies that are going really well, including steel company SSAB, which reports on Friday. The share will rise by 4.5 percent in initial trading.
Telecom giant Ericsson, which on Thursday announced its divorce from Sony is now in fact, rising about 5.0 percent in the morning trade. Even truck maker Volvo was also trading up sharply as much as 4.9 percent.

Most banks are also doing well after reporting buoyant results and after news from Europe that most European banks affected by the Euro crises would be recapitalised. Swedish banks largely welcome the news and on Thursday morning, Nordea was trading up 3.7 percent, Swedbank was up 2.4 percent up and SEB also was up 3.6 percent.

Handelsbanken goes a bit against the grain and traded around zero – It is not clears if this has to do with the banks intension to expand more into the core Euro markets such as Holland as it announced yesterday or whether because it refused to confirm that it will follow the trend of the other big Swedish banks and cut down staff.

Anyway, the other big corporations which were performing well include industrial group Hexagon which was up 9.9 percent and investment company Melker Schorling which rose 8.1 percent.
Astra Zeneca and ABB went against the trend and are trading both down 0.5 percent. Today's biggest loser is the struggling search engine/ yellow pages company Eniro which is falling like a piece of rock - already down 23.0 percent. Eniro announced today that it was buying the Swedish search company 118800.

Lundin Mining's weak quarterly report at a press conference in the morning affected 11.0 percent of its share.
Looking at the rest of Europe the mood looks even more positive. German DAX was rising 3.2 percent and the French CAC40 is 3.2 percent up.
By Scancomark.se Team




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