Economic optimism flickers on world markets

Stocks advanced on both sides of the Atlantic amid positive data on the US economy, and the announcement of a ceasefire between Israel and Hamas.

Weighing on the mood, and gains, however was the failure of euro-zone ministers and officials of the International Monetary Fund and European Central Bank to produce an agreement needed to release the next part of international funds to keep Greece from falling into bankruptcy.

The latest reports provided cautious optimism on the state of the world's largest economy, as US manufacturing grew at the fastest pace in five months in November, while fewer people applied for unemployment benefits last week.

Jobless claims dropped by 41,000 to 410,000 in the week ended November 17, according to Labor Department data.

To be sure, the Thomson Reuters/University of Michigan's final November reading on the overall index on consumer sentiment came in at 82.7, up from 82.6 in October, yet down from a preliminary reading of 84.9.

"We're still not exactly going gangbusters," Sarah Watt, an analyst at Wells Fargo in Charlotte, North Carolina, told Reuters. "The data point to modest growth."

In afternoon trading in New York, the Dow Jones Industrial Average rose 0.41 per cent, the Standard & Poor's 500 Index gained 0.15 per cent, while the Nasdaq Composite Index advanced 0.32 per cent.

Egyptian Foreign Minister Mohamed Amr said a ceasefire between Israel and Hamas would take effect at 9pm Cairo time. While supportive for equities, gains in oil were tempered by the announcement.

Crude oil for January delivery was last up 0.4 per cent to US$87.09 a barrel in New York, after rising as high as US$87.89 earlier in the session.

Shares of Deere & Co slumped, last down 4 per cent, after the farm equipment maker posted a quarterly profit that fell short of expectations.

In Europe, the Stoxx 600 Index finished the day with a 0.2 per cent increase on the previous close.

A summit of European Union leaders tomorrow is unlikely to produce agreement on a seven-year budget plan. German Chancellor Angela Merkel told lawmakers in the national parliament in Berlin today that budget talks may slide into next year, according to Bloomberg.

Euro-zone ministers, the International Monetary Fund and the European Central Bank concluded talks without agreement on the way to help Greece overcome its budget shortfall.

Several European officials played down the delay, saying the disagreements were technical and a deal would be reached when they meet again on November 26, Reuters reported.

- BusinessDesk

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