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Stocks rise as Europe says Spain won't need a bailout

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Spain's Prime Minister Mariano Rajoy.

Spain's Prime Minister Mariano Rajoy.

Spain's Prime Minister Mariano Rajoy.

Stock markets largely rallied yesterday following Tuesday's damaging rout after the European Commission insisted that Spain wouldn't need to pursue Ireland, Greece and Portugal in seeking a bailout.

Spain's prime minister, Mariano Rajoy, addressed his deputies yesterday to detail the biggest budget cuts the country has seen in three decades. The country's borrowing costs have also jumped.

"The idea that Spain is going to be able to avoid a bailout is going to be tested over the next few months," predicted Harvinder Sian, a senior interest rate strategist at Royal Bank of Scotland in London.

But stocks rose around Europe and in the US, with Italy having managed to sell €11bn of bonds, meeting its target for the auction. However, rates on its one-year debt rose for the first time since November amid the looming return of the debt crisis.

Stronger gains on markets earlier in the day were pared as the closing bell loomed, however.

In Ireland, the stock market performance was much more muted than on other European bourses.

The ISEQ Overall Index ended virtually flat, shedding just 2.35 points, or less than 0.1pc, at 3,139.34. It had been in marginally positive territory for most of the day.

Among yesterday's movers was dairy group Glanbia. It advanced 4.3pc, or 23.4 cent, to €5.63. Bank of Ireland also recovered some of Tuesday's lost ground, adding 2.9pc to 10.6 cent. CRH gained 1.4pc to €14.81.

The big faller of the day was exploration minnow Aminex. It tanked over 34pc at one point before closing down 22.6pc, or 1.7 cent, at 6 cent. The company said that additional drilling at is onshore block in Tanzania had failed to locate any further gas reserves.

Providence Resources declined 5pc at one stage after it said its finance director, Philip O'Quigley, is leaving the role to become chief executive of Canadian firm Falcon Oil & Gas. He'll remain as a non-executive director of Providence. Shares in providence closed down 4.3pc, or 33 cent, to €6.77.

Shares in Ryanair slipped 10.6 cent to €4.31.

European markets were also spurred by stronger performances from banks and car makers. The FTSE-100 gained 0.7pc, Germany's DAX rose 1pc and France's CAC-40 rose 0.6pc.

HSBC, Europe's biggest bank, said there is a "glimmer" of light for European bank earnings as it upgraded the industry to overweight for the first time in four years.

European bank earnings may have "bottomed" as long as the region's economy doesn't contract by more than 2pc this year, HSBC analyst Peter Sullivan said.

Deutsche Bank, Germany's largest bank, added 2.3pc to €34.48. Barclays gained 2.8pc to 212.1p.

Preferred shares of Volkswagen added 3pc to €128.80, after four days of losses.

Europe's largest carmaker VW, which counts Audi as its prestige marque, said first-quarter sales rose 10.5pc to 1.36 million units.

BMW, the world's largest maker of luxury vehicles, gained 2.5pc to €66.71.

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