European markets gain following strong U.S. indicators

Milan bourse leads as banks and Fiat boost shares

European markets gain following strong U.S. indicators

Milan, May 28 - European stocks climbed Tuesday buoyed by the release of robust economic reports from the US which pointed to increasing strength in the world's largest economy. US consumer confidence in May rose to the highest level since February 2008, according to figures released Tuesday, while the Standard & Poor's Case-Shiller index showed home prices in 20 cities across the United States posted year-on-year growth for the third month in a row. The indicators boosted Europe's markets, with Milan leading the bulls, helped also by expectations that the EU will end its excessive-deficit procedure against the country as soon as Wednesday. That is expected to free up eight billion euros of public money in Italy, funds which would otherwise have been applied to reducing the debt as a percentage of GDP. The FTSE-Mib ended the day up 2.1% at 17,519.79, followed by Madrid's IBEX 35, up 1.77% at 8,511.3 and London's FTSE 100 gaining 1.62% at 6,762.01. Paris's CAC 40 and Frankfurt's DAX also edged higher, ending up, respectively, 1.39%, at 4,050.56, and 1.16%, at 8,480.87. In Italy, banking shares performed particularly well following a report by credit rating agency Moody's which raised its outlook on the US banking system. Leading gainers in Italy's financials were Intesa Sanpaolo, up 3.8%, followed by Bper, up 3.5%, and Unicredit, up 3.4 percent. Fiat, Italy's largest industrial company, also boosted Milan after its shares jumped 3.45%. Investors piled into the stock following news the company was studying ways to complete integration with its US-based Chrysler unit and possibly plan an over $20-billion US stock listing. Meanwhile, the spread between Italy's 10-year bond and its German counterpart closed at 253.5 basis points, down from 259 basis points Monday. The yield on Italian 10-year paper closed at 4.03%. The spread between lending rates in the two countries is seen as an indication of investor faith in the Italian economy and its ability to cope with a lingering recession.

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