European markets rose Tuesday as investor confidence was lifted by hopes that Spain will soon apply for a bailout and trigger the European Central Bank’s new bond buying plan.
The French CAC 40 index was up 0.71 percent or 24.41 points to 3444.69. Shares of Safran SA rose 1.94 percent, and shares of Solvay SA gained 1.21 percent.
London’s FTSE 100 index rose 0.43 percent or 25.24 points to 5830.85. Shares of Antofagasta PLC advanced 1.43 percent, and shares of Kazakhmys PLC were up 1.30 percent.
The German DAX 30 index advanced 0.66 percent or 48.07 points to 7309.32. Shares of Commerzbank AG rose 2.14 percent and shares of Bayer AG gained 0.98 percent.
Spain's IBEX 35 was up 0.95 percent or 73 points to 7751.50. Shares of Abengoa SA rose 3.91 percent and shares of Inditex SA gained 1.39 percent.
Reports that Spain is getting closer to requesting a bailout from the ECB lifted market sentiment. Market commentators believe that with Spain’s activity indicators continuing to weaken and pointing to an increasingly deep recession, it will soon seek bailout.
Investors will be keenly watching Spain’s Letras auctions Tuesday. At the auction, the treasury of Spain is seeking to sell 12-month and 18-month Letras, amounting from 3.5 billion euros ($4.5 billion) to 4.5 billion euros.
Investors are focusing on the outcome of the EU Council meeting on Oct. 18-19 in Brussels. “Despite the better market tone, we do not see major breaks out of recent ranges, with attention on the 84 S&P 500 companies set to release earnings this week and developments at the upcoming EU Council meeting,” Credit Agricole said in a note.
However, it is likely that the Spanish Government is anxious to put off any bailout until after the regional elections in Galicia and Basque Country on Oct. 21 take place. Also, the pressure on Spain to enter a programme has been eased by the drop in government bond yields seen in the last couple of months.