European Stocks Recover from Worst Drop in Four Months as the EU Prepares Possible Aid Package for Ireland’s Banks 

Europe Session Key Developments

- Ireland's Hold Out Will Lead to Significant Volatility

- British Officials Said They Would Back Support for Ireland to Prevent Bank Woes from Reaching the U.K. Market

European Equities rose modestly on Wednesday as investors hoped that European Union officials would devise a more definitive plan to cope with the region’s debt crisis though all they got was a pledge of support from Britain’s Finance Minister. Concerns that Ireland will not be able to pay the cost of rescuing its banks – in trouble largely because of the real estate boom collapse – has worsened Europe’s government debt crisis. Markets have pushed up borrowing costs for other troubled nations like Portugal and Spain, threatening to destabilize the common Euro currency. Officials from the International Monetary Fund and the European Central Bank will meet in Dublin on Thursday to further analyze the situation with Ireland’s troubled banking sector.

FTSE100 / 5692.56 / 10.66 / 0.19%

U.K. jobless claims unexpectedly fell in October, suggesting that the labor market is recovering momentum as the prospect of a record budget squeeze looms. U.K. Stocks rose slightly led by Experian PLC, the world’s biggest credit-checking company, which jumped 6.3% to 748 pence after reporting that first-half net income rose to 260 million up from 249 million a year earlier. (its biggest gain since April 2009). GlaxoSmithKline PLC (Glaxo) rose 2.4% to 1,243 pence after winning backing from an advisory panel of the U.S. Food and Drug Administration for the company’s Benlysta lupus drug. ICAP PLC, the world’s biggest interdealer broker, rose 1.3% to 472 pence after reporting that first-half pretax profit rose 2% to 292 million as revenue increased by 9%.

CAC 40 / 3792.35 / 29.88 / 0.79%

French stocks also reported gains after the CAC’s biggest drop in 3 months. Soitec SA surged 6.5% to 8.68 Euros after the supplier to the chip industry reported a smaller first-half net loss than expected citing sustained demand from the semiconductor industry. Zodiac Aerospace SA rose 2.2% to 52.78 Euros as the biggest maker of airplane seats in Europe may be taken over by a hostile bid by Safran SA (Safran’s shares slid 1.4% to 21.53 Euros).

DAX / 6700.07 / 36.83 / 0.55%

German stocks advanced on the general sentiment across Europe as the EU started work on a possible aid package for Ireland. Infinenon, Europe’s 2nd biggest chipmaker, rose 1.4% to 6.31 Euros as RBS raised its recommendation on the stock to “buy” from “hold” continuing Infineon’s gains made yesterday on positive profit reports. MAN SE, Europe’s 3rd largest truckmaker, jumped 2.5% to 88.31 Euros while Lufthansa Airlines rose 2.3% to 15.98 Euros. There is still uncertainty in the market with a risk of sideways trading between 6,650 and 6,750 in the DAX index.

IBEX 35/ 10189.30 / 93.90 / 0.93%

Spain’s IBEX 35 index rose 0.9% to trim losses of 2.5% yesterday. Cie Automotive added 2.1% to 4.19 Euros after the Spanish car-parts maker agreed to sell its Mexican steel wheels business to Brazil’s Iochpe-Maxion SA for 3.2 million. Fersa Energias Renovables SA gained for the first time in 4 days gaining 2.3% to 1.11 Euros after Goldman Sachs changed the stock’s status from “neutral” to “sell.”

S&P/MIB / 20639.08 / 76.01 / 0.37%

Pininfarina SpA surged 22% to 3.51 Euros as the designer of sports cars gauges interest for an acquisition by other firms like Magna International Inc. Tenaris SA rose 4.1% to 16.17 Euros paring yesterday’s 5.4% decline as European basic-resource shares climbed 0.8% today, the 5th best performance among 19 Industry groups in the Stoxx Europe 600 Index.

Notable Europe Event Risk / Economic Releases (for Thursday, Nov. 18th)