Nifty settles at 5-week high as euro-zone debt worries ease

Key benchmark indices edged higher as stocks rose across the globe on receding euro-zone debt worries. The 50-unit S&P CNX Nifty attained its highest closing level in five weeks. The barometer index, BSE Sensex, jumped 117.11 points or 0.73%, up about 105 points from the day's low and off about 100 points from the day's high. The market breadth was strong. BSE Mid-Cap and Small-Cap indices rose more than 1% each, with both these indices outperforming the Sensex. Index heavyweight Reliance Industries (RIL) edged lower in volatile trade. Reliance Anil Dhirubhai Ambani (ADA) group shares surged. World stocks rose as successful European bond auctions on Thursday, 12 January 2012, helped alleviate some of the worst concerns about the euro-zone's debt woes.

The Sensex has jumped 699.70 points or 4.52% so far in this month. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 3,656.52 points or 18.45%. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 1,018.76 points or 6.73%.



Coming back to today's trade, metal stocks extended recent gains as prices of many commodities rose in New York on Thursday, 12 January 2012. Interest rate sensitive realty stocks gained for the fourth straight day on expectations that the RBI will start cutting interest rates in the coming months to prop up slowing economy. Pharma stocks fell on profit taking after the recent gains. Power generation stocks gained after data released on Thursday, 12 January 2012, showed strong growth in electricity generation in November 2011. Capital goods stocks rose on bargain hunting after a steep decline last month.

The market edged higher in early trade on firm Asian shares. The market trimmed initial gains to hit fresh intraday low in morning trade. Key benchmark indices recovered after erasing almost the entire intraday gains in mid-morning trade. The market regained strength in early afternoon trade. The market extended gains in afternoon trade, with Nifty hitting 4-1/2-week high. Volatility ruled the roost as key benchmark indices trimmed gains after surging to scale 4-1/2-week highs in mid-afternoon trade.

The BSE Sensex jumped 117.11 points or 0.73% to settle at 16,154.62, its highest closing level since 11 January 2012. The index jumped 219.83 points at the day's high of 16,257.34 in mid-afternoon trade, its highest level since 12 December 2011. The index rose 12.27 points at the day's low of 16,049.78 in mid-morning trade.

The S&P CNX Nifty surged 34.75 points or 0.72% to settle at 4,866, its highest closing level since 9 December 2011. The index hit a high of 4,898.85 in intraday trade. The index hit a low of 4,834.20 in intraday trade.

The BSE Mid-Cap index rose 1.14% and the BSE Small-Cap index gained 1.44%. Both these indices outperformed the Sensex.

BSE clocked turnover of Rs 2725 crore, higher than Rs 2596.20 crore on Thursday, 12 January 2012.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,892 shares rose and 922 shares fell. A total of 85 shares were unchanged.

Among the 30-member Sensex pack, 19 rose while rest of them fell.

Index heavyweight Reliance Industries (RIL) fell 0.75% to Rs 732.05. The stock was volatile. The stock hit a high of Rs 750.60 and a low of Rs 728.35. The company announces Q3 results on 20 January 2012. RIL last week said it has scheduled a planned maintenance turnaround of one of the crude distillation unit of its SEZ Refinery at Jamnagar complex for a period of approximately three weeks starting mid February 2012. This maintenance turnaround is planned for the first time after its commissioning during the Financial Year 2008-09, RIL said. This opportunity would also be utilised to take up productivity improvement related jobs in other secondary processing units as necessary, RIL said. During this period, other three crude distillation units at Jamnagar refining complex are expected to sustain normal operations, RIL added.

RIL had announced early last week that it is divesting a part of the interest in ETV channels in favour of TV18 Broadcast, a Network18 Group firm. RIL said that as a part of the deal with TV18 Broadcast, Infotel Broad Band Services (Infotel), a subsidiary of RIL, has entered into a Memorandum of Understanding with TV18 Broadcast and Network18 Media and Investments for preferential access to all content of the latter for distribution through the 4G Broadband Network being set up by RIL.

India's largest gas transmission and marketing company GAIL (India) lost 3.19% and was the top loser from the Sensex pack. Reportedly, the government has asked the petroleum regulator to determine marketing margins for natural gas on the basis of costs to protect consumers in the short-supplied market. Until now, marketing margins were negotiated between buyers and sellers.

Pharma stocks fell on profit taking after recent gains. Cipla and Sun Pharmaceutical Industries fell 0.68% to 1.18%.

Power generation stocks gained after data released on Thursday, 12 January 2012, showed strong growth in electricity generation in November 2011. NTPC, Tata Power Company, Reliance Infrastructure, Reliance Power and CESC rose by between 0.8% to 7.66%. Data released by the government on Thursday, 12 January 2012, showed that electricity generation rose 14.6% in November 2011 over November 2010.

Capital goods stocks rose on bargain hunting after a steep decline last month. BEML, ABB, Bhel, L&T and Usha Martin rose by between 0.12% to 8.19%.

Suzlon Energy rose 8.72% after the company said its subsidiary, REpower Systems SE, won a contract to supply 10 wind turbines to Bradwell wind farm in the UK.

Sintex Industries fell 0.62% after the company announced during market hours today that consolidated net profit fell 27.13% to Rs 82.20 crore on 1.85% decline in total income to Rs 1176.19 crore in Q3 December 2011 over Q3 December 2010.

Metal stocks extended recent gains as prices of many commodities rose in New York on Thursday, 12 January 2012. Welspun Corp, Jindal Steel & Power, Sail, Hindustan Zinc, Sesa Goa, Nalco, Hindalco Industries, and Sterlite Industries gained by between 0.62% to 5.63%. LMEX, a gauge of six metals traded on the London Metal Exchange gained 2.16% on Thursday, 12 January 2012.

US aluminium major Alcoa at the time of announcing its Q4 results early this week said it has bullish view of the global aluminum market. The aluminum company's results were in line with expectations overall. It swung to a fourth-quarter loss as prices slumped and costs rose but it has a bullish view of the global aluminum market.

India's largest private sector steel maker by sales Tata Steel jumped 7.11% as euro-zone debt worries eased. European operations constitute almost 65% of Tata Steel's sales. The stock was the top gainer from the Sensex pack.

Interest rate sensitive realty stocks gained for the fourth straight day on expectations that the RBI will start cutting interest rates in the coming months to prop up slowing economy. Lower interest rates may help revive demand for properties. Purchases of both residential and commercial property are largely driven by finance. DLF, Anant Raj Industries, Unitech and HDIL rose by between 0.09% to 3.27%.

The government's notification to allow 100% FDI in single brand retail could positively influence demand for commercial real estate market.

India's property investments by private-equity firms rose 69% last year, according to Venture Intelligence, a research company that tracks private equity, and mergers and acquisitions. Private equity made $2.68 billion of real-estate investments through 53 transactions in the country in 2011. In 2010, they spent $1.58 billion on 55 investments.

Reliance ADA Group shares surged. Reliance Communications, Reliance Infrastructure, Reliance Broadcast Network, Reliance Capital, Reliance MediaWorks and Reliance Power gained by between 2.03% to 15.89%.

Coal India rose 5.56% on reports the company has agreed in-principle to increase the wages of its three lakh-odd mine workers by 25%, as against a 100% hike that the unions had demanded last year. R. Mohan Das, director of personnel and industrial relations at Coal India was quoted by the media as saying that the company is likely to sign a five-year wage pact with its leading workers' union in a meeting scheduled for the end of January 2012. The wage agreement, if signed, will be with retrospective effect from 1 July 2011, he added. The wage increase will raise the company's annual staff cost by roughly Rs 4000 crore.

Interest rate sensitive banking stocks extended recent gains triggered by expectations that the Reserve Bank of India will start cutting interest rates in the coming months to prop up slowing economy.

India's largest commercial bank by net profit and branch network State Bank of India (SBI) gained 0.93%. The stock rose for fourth straight session today. The bank early last week said it has cancelled the negotiations for establishing a joint venture entity with Visa Inc and Elavon Inc for conducting the merchant acquiring business. In terms of the bank's earlier letter dated 4 May 2010, a joint venture was proposed between SBI Payment Services, the wholly owned subsidiary of SBI and Visa Inc and Elavon Inc.

The government will infuse Rs 5000 crore ($942 million) to Rs 6000 crore ($1.13 billion) in State Bank of India by the end of the current fiscal year in March, the bank's chairman Pratip Chaudhuri said on 5 January 2012. After the capital infusion, the government's share [in the bank] will increase to 64%, Chaudhuri told media reporters. The government currently owns 59% of India's largest lender by assets. Mr. Chaudhuri also said that the bank may raise further capital next fiscal year through a follow-on share sale or a private sale of shares to institutional investors.

India's largest private sector bank by branch network ICICI Bank rose 1.04%, with the stock gaining for the fifth straight day.

India's second largest private sector bank by branch network HDFC Bank rose 0.58%, with the stock gaining for the fifth straight day. The bank unveils Q3 results on 19 January 2012.

Interest rate sensitive auto stocks rose on expectations that the Reserve Bank of India will start cutting interest rates in the coming months to prop up slowing economy. Lower interest rates may help revive demand for vehicles. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.

Tata Motors gained 1.24%, with the stock extending Thursday's 0.78% rise. The company's total sales of commercial and passenger vehicles jumped 22% to 82,278 units in December 2011 over December 2010. The domestic sales of the vehicles in both categories for the month stood at 76,663 cars, a 24% jump compared to 61,685 in December 2010, the company said in a statement. However, exports declined 3% to 5,615 units compared to 5,809 in December 2010.

Ashok Leyland gained 2.26%, with the stock extending recent gains. The company reported sales of 9,088 units for December 2011 including 1,099 units of the recently launched LCV for cargo transportation -- Dost. Adjusting for Dost, which was launched in October 2011, sales came in at 7,989 units, up 6% year-on-year.

Mahindra & Mahindra (M&M) rose 1.04%. SsangYong Motor Co. will start assembling sport-utility vehicles in India late this year to avoid high import tariffs imposed on completely built units, the company's chief executive Lee Yoo-il said in a media interview on Thursday. M&M's president for automotive and farm equipment Pawan Goenka Thursday, 5 January 2012, said that the company plans to start assembling SsangYong vehicles in China, Brazil and Russia in the next two years. M&M last year picked up a 70.03% stake in South Korean auto maker SsangYong Motor Co. for 522.5 billion Korean won.

M&M on Monday introduced a hydrogen-powered three-wheeled vehicle that it jointly developed with the United Nations Industrial Development Organization and the Indian Institute of Technology, New Delhi, for $1 million. The project, called DelHy 3W, took three years to complete, the Indian auto maker said, adding that the UNIDO International Centre for Hydrogen Energy Technologies funded half the costs. US-based Air Products Inc. has set up a hydrogen station for the three-wheeler project in New Delhi. The vehicles will be operated at Pragati Maidan, which is the venue for several trade fairs including the ongoing auto show.

M&M's total automobile sales jumped 26% to 42,761 units in December 2011 over December 2010.

Maruti Suzuki India fell 1.79%. Maruti on Friday, 6 January 2012, unveiled India's first compact multi purpose vehicle Ertiga at the auto expo. Ertiga's compact dimensions make it easy to park ad maneuver, Maruti said. Maruti had on Thursday, 5 January 2012 unveiled XA Alpha -- a concept for a compact sports utility vehicle (SUV).

Maruti's total vehicle sales fell 7.1% to 92,161 units in December 2011 over December 2010. Domestic sales dropped 13.4% to 77,475 units. Exports surged by 50.5% to 14,686 units.

Fiat India Automobiles said early last week that it expects to conclude shortly discussions with Maruti Suzuki India for the supply of diesel engines for cars, a step that will allow the local unit of Suzuki Motor Corp. cut the waiting period on its Swift model. Maruti currently sources all its diesel engines from Suzuki Powertrain, a joint venture between Maruti and Suzuki. These engines are made using Fiat's technology.

Two-wheeler makers extended recent losses triggered by concerns of increased competition as global two-wheeler makers launched new models and announced expansion plans at the India auto show held recently to attract more buyers in the world's second-largest market for motorcycles and scooters.

Bajaj Auto declined 2.96%. The firm unveiled an ultra-low-cost car early last week, its first foray into the four-wheel market. The compact "RE60" boasts of high fuel efficiency and low carbon dioxide emissions, but the firm did not release a price tag.

Bajaj Auto's total sales rose 10% to 3.05 lakh units in December 2011 over December 2010. Motorcycle sales rose 8% to 2.63 lakh units and commercial vehicle sales rose 27% to 41,991 units. Exports jumped 25% to 1.19 lakh units. The company announced the monthly sales data at the beginning this month.

India's largest two-wheeler maker Hero MotoCorp fell 1.25%. Hero MotoCorp expects double-digit percentage growth in sales for the fiscal year starting in April, Managing Director Pawan Munjal said at the New Delhi Auto Expo. The company on Friday, 6 January 2012 unveiled its first concept hybrid scooter.

The company last week launched two motorcycle models and one scooter model. The company will start retail sales of the 110-cubic-centimeter scooter model Maestro later this month, while that of the 110cc motorcycle model Passion X Pro and 125cc motorcycle Ignitor will happen in the remainder of the year.

But, TVS Motor Company rose 2.07%. TVS Motor on Tuesday, 10 January 2012 said it will launch four two-wheeler models this year and may make investments to raise output as it seeks to grow its market share amid growing competition from rivals such as Honda Motor Company. The Chennai-based company will introduce a motorcycle with a 125-cubic-centimeter engine in June and follow it with another in December, which will witness the reintroduction of the Victor brand. TVS will also introduce a 125cc scooter in December, the company said.

Airline stocks extended recent gains triggered by hopes the government may allow foreign air carriers to invest in domestic aviation firms. Kingfisher Airlines and SpiceJet rose by between 4.59% to 5.32%.

Civil Aviation Minister Ajit Singh on Wednesday said that a panel of secretaries has recommended allowing foreign airlines to hold up to a 49% stake in Indian carriers. The panel's recommendation is a step forward from the 26% stake recently proposed for foreign carriers by the Department of Industrial Policy and Promotion. Indian laws currently allow up to 49% foreign direct investment in airlines, but foreign carriers are barred from investing in the sector

Jet Airways rose 2.02%, with the stock extending recent gains. The company on Wednesday clarified that the Jet Airways group complies with all global and domestic aviation norms. The company said that the carrier accords the highest priority to the safety of its guests, and all its cockpit and cabin crew alike. It said that the airline takes all the necessary precautions to ensure on-board safety and security at all times.

IT stocks extended Thursday's losses triggered by IT bellwether Infosys cutting earnings and revenue growth guidance for the year ending March 2012. Infosys fell 0.12%, with the stock extending Thursday's 8.4% slump after the company projected a marginal 1.25% growth in non-annualised earnings per American Depositary Share at $0.81 in Q4 March 2012 over Q3 December 2011. The company has projected a flat to 0.22% growth in consolidated revenue in dollar terms at $1.806 billion to $1.81 billion in Q4 March 2012 over Q3 December 2011. The IT major issued its outlook for the quarter ending March 2012 at the time of announcing Q3 December 2011 results before trading hours on Thursday, 12 January 2012.

The company has revised downwards both earnings as well as revenue growth guidance in dollar terms for the year ending March 2012 (FY 2012). The company has projected 14.5% growth at $3 per American Depositary Share in FY 2012 over FY 2011 (year ended March 2011). The company has projected 16.4% growth in revenue at $7.029 billion to $7.033 billion in FY 2012 over FY 2011

Infosys' consolidated net profit as per International Financial Reporting Standards (IFRS) rose 11.4% to $458 million on 3.4% growth in revenue to $1.806 billion in Q3 December 2011 over Q2 September 2011.

In rupee terms, Infosys' consolidated net profit as per International Financial Reporting Standards (IFRS) jumped 24.4% to Rs 2372 crore on 14.8% growth in revenue to Rs 9298 crore in Q3 December 2011 over Q2 September 2011.

Thanks to a weak rupee, Infosys has revised upwards both earnings and revenue growth guidance in rupee terms for FY 2012. The company has projected 23.2% growth in EPS at Rs 147.13 in FY 2012 over FY 2011. The company has forecast 24.6% to 24.7% growth in revenue at Rs 34273 crore to Rs 34294 crore in FY 2012 over FY 2011. Infosys has projected 1.46% growth in non-annualised EPS at Rs 42.12 in Q4 March 2012 over Q3 December 2011. The company has projected 1% to 1.22% growth in revenue at Rs 9391 crore to Rs 9412 crore in Q4 March 2012 over Q3 December 2011.

Among other IT stocks, India's largest software services exporter by revenues Tata Consultancy Services (TCS) fell 0.58%, with the stock extending Thursday's 3.89% losses. The company unveils Q3 December 2011 results on 17 January 2012.

But, India's third largest software services exporter by revenues Wipro rose 2.56%, after sliding 2.6% on Thursday. The company unveils Q3 December 2011 results on 20 January 2012.

A firm rupee also weighed on IT stocks. The Indian rupee rose to its highest level in nearly six weeks against the dollar on Friday, 13 January 2012, a day after the central bank was seen aggressively selling the greenback. The rupee was at 51.46/47 to the dollar, stronger than Thursday's close of 51.60/61. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.

Shares of sugar companies extended recent gains on reports that the government may allow additional sugar exports of one million tonnes during the current marketing year. Shree Renuka Sugars, and Bajaj Hindustan, Balrampur Chini Mills rose by between 0.49% to 2.32%.

The government is likely to consider allowing up to one million tones more export for the year that began 1 October 2011. Sugar companies have already been allowed to export one million tones for this marketing year (Oct 2011-Sep 2012). Meanwhile, according to newspaper reports, the AP High Court will start hearing on a batch of petitions challenging the intervention of the Centre in selling of sugar stocks in the open market by various private sugar factories of the state from January 23.

Cals Refineries clocked highest volume of 1.56 crore shares on BSE. Suzlon Energy (1.02 crore shares), Lanco Infratech (83.45 lakh shares), HFCL (73.85 lakh shares) and Resurgence Mines (57.24 lakh shares) were the other volume toppers in that order.

Tata Steel clocked highest turnover of Rs 133.81 crore on BSE. Infosys (Rs 110.17 crore), SBI (Rs 99.86 crore), United Spirits (Rs 65.58 crore) and JSW Steel (Rs 62.97 crore) were the other turnover toppers in that order.

Foreign institutional investors (FIIs) bought shares worth Rs 506.80 crore on Thursday, 12 January 2012, as per provisional data from the stock exchanges. FII inflow totaled Rs 1262.43 crore in three trading sessions from 10 to 12 January 2012, as per provisional data from the stock exchanges. FIIs have bought shares worth a net Rs 1889.68 crore so far in January 2012, as per provisional data from the stock exchanges.

State governments in India have reportedly given their in-principle approval to a proposed national goods and service tax (GST), raising hopes that the ambitious tax reform could be included in the upcoming budget. Finance ministers from different states agreed to the central government's GST proposal, but specified a list of services, such as luxury and entertainment, that would remain taxed at the state level. The GST will cut business costs and boost government tax revenue, but has missed several deadlines for implementation due to resistance from states that fear a loss of fiscal autonomy and the main opposition Bharatiya Janata Party.

The results season has begun on a weak note, with IT bellwether Infosys cutting its earnings and revenue growth guidance in dollar terms for the year ending March 2012 (FY 2012). Analysts expect weak Q3 December 2011 results due to lower volume growth in a slowing economy, higher raw material costs and higher interest charges. The focus will be on guidance from the company managements on outlook for the remaining part of the year and for the next year.

TCS and HCL Tech unveil quarterly results on 17 January 2012. Jindal Steel & Power announces Q3 results on 18 January 2012. HDFC Bank, Hero MotoCorp and Bajaj Auto unveil Q3 results on 19 January 2012. Reliance Industries, Wipro, ITC, Axis Bank, Jet Airways (India) and Hindustan Zinc unveil Q3 results on 20 January 2012. JSW Steel reports its Q3 standalone results on 20 January 2012. UltraTech Cement, Asian Paints, Zee Entertainment Enterprises and Godrej Consumer Products unveil Q3 results on 21 January 2012. L&T, Maruti Suzuki, Idea Cellular, GAIL (India) and Kotak Mahindra Bank unveil Q3 results on 23 January 2012.

Cairn India, Grasim and Biocon unveil Q3 results on 24 January 2012. Sesa Goa, Rural Electrification Corporation and Tata Communications unveil Q3 results on 25 January 2012. NTPC unveils Q3 results on 27 January 2012. ICICI Bank, Punjab National Bank, Dabur India and Siemens unveil quarterly results on 31 January 2012. Dr. Reddy's Laboratories reports Q3 results on 3 February 2012. India Cements announces Q3 results on 6 February 2012. Mahindra & Mahindra unveils Q3 results on 7 February 2012. Hindalco unveils Q3 results on 9 February 2012. BPCL unveils Q3 results on 10 February 2012. Aditya Birla Nuvo announces Q3 results on 11 February 2012.

The government has decided to allow Qualified Foreign Investors (QFIs) to directly invest in the Indian equity market from 15 January 2012. A QFI is an individual, group or association resident in a foreign country that is compliant with Financial Action Task Force (FATF) standards. QFIs include pension funds which normally tend to stay invested for a longer period of time. QFIs do not include FIIs/sub accounts. In August last year, the government allowed foreign investors to directly invest up to $13 billion in equity and debt schemes of mutual funds.

Qualified foreign investors, or QFIs, will now be able to invest individually up to 5% of the capital of the Indian company. Cumulatively, QFIs can invest up to 10% of the capital of the company being invested in. These limits are over and above the FII and NRI investment ceilings prescribed under the PIS route for foreign investment in India, a government statement said.

Food inflation remained in the negative territory in the last week of December mainly due to base effect, data released by the government showed on Thursday, 12 January 2012. Fuel inflation also softened slightly. Food inflation shrank by 2.9% in the week ended December 31 after shrinking by 3.36% in the preceding week, the Commerce & Industry Ministry said on Thursday. Inflation in the Primary Articles group fell to 0.51% in the week under review, from 0.1% in the week ended December 24. Inflation in the Fuel & Power group stood at 14.45% in the week ended December 31 versus 14.60% in the previous week.

At its mid-quarterly monetary policy review meet on 16 December 2011, the RBI left its main lending rate unchanged in order to support faltering economic growth as inflation shows signs of cooling. While inflation remains on its projected trajectory, downside risks to growth have clearly increased, RBI had said in a statement on 16 December 2011. From this point on, monetary policy actions are likely to reverse the cycle, responding to the risks to growth, RBI had said.

RBI had said inflation risks remain high and inflation could quickly recur as a result of both supply and demand forces. RBI also said that the rupee remains under stress. The timing and magnitude of further actions will depend on a continuing assessment of how these factors shape up in the months ahead, RBI said. The RBI has raised rates 13 times since March 2010.

Stronger-than-expected growth in industrial production in November 2011 has raised doubts about the timing and pace at which the Reserve Bank of India would likely ease its monetary policy. Industrial output rose 5.9% in November 2011, compared with a revised contraction of 4.74% in October 2011, data released by the government on Thursday, 12 January 2012, showed. Manufacturing output, which constitutes about 76% of the industrial production, grew an annual 6.6% in November 2011. Industrial production had contracted in October 2011, snapping consistent growth for the preceding 29 months in a row.

Data on inflation for December 2011 on Monday, 16 January 2012, could provide cues on the central bank's likely policy stance at the third quarter review of Monetary Policy 2011-12 scheduled on 24 January 2012. Inflation based on wholesale price index (WPI) is seen easing to 7.4% in December 2011 from 9.1% rise in November 2011, as per the median estimate of a poll of economists carried out by Capital Market.

The budget for 2012/13 ending March will be presented after elections scheduled in five states, Finance Minister Pranab Mukherjee said on Monday, 2 January 2012. State elections are scheduled between the end of January and early March. The annual budget is usually presented on the last working day of February. The Election Commission on 24 December 2011 announced the dates for the assembly polls in Uttar Pradesh, Punjab, Uttarakhand, Manipur and Goa. Uttar Pradesh will have polling on February 4, 8, 11, 15, 19, 23 and 28, while Uttarakhand and Punjab will go to polls on January 30. Manipur will have polls on January 28 and Goa on March 3.

European stocks rose on Friday on strong demand for Italy's bond auction. Key benchmark indices in France, Germany and UK rose by between 0.24% to 1.05%. Italy's three-year debt costs fell below 5% at the first bond auction of the year spurring hopes the troubled borrower would be able to make it through a refinancing hump in the first months of the year. Domestic demand fuelled by cheap European Central Bank funds allowed Italy to raise the maximum planned amount of 4.75 billion euros at the sale, after helping Spain sell twice the targeted amount of bonds at lower rates at an auction on Thursday. Italy sold its November 2014 three-year benchmark bond at an average rate of 4.83% on Friday, down from a 5.62 yield it paid only around two weeks ago.

Italy was able to sell one-year bonds on Thursday at a rate of just 2.735%, less than half the 5.95% rate it had to pay last month. Spain was able to raise double the amount of money it had sought to raise in its own bond sale as demand for its debt was strong.

Both the European Central Bank (ECB) and the Bank of England (BOE) made no changes to their interest rate policies with the ECB holding steady at 1% and the BOE maintaining its 0.5% rate on Thursday. ECB President Mario Draghi stated he sees some signs of stabilization in the struggling region.

Asian stocks rose on Friday as a drop in Italian and Spanish borrowing costs added to optimism the European Central Bank is averting a credit crunch in financial markets. Key benchmark indices in Japan, Hong Kong, Singapore, Indonesia, and South Korea rose by between 0.57% to 1.75%. Key benchmark indices in China and Taiwan fell 1.34% and 0.07%, respectively.

Trading in US index futures indicated a flat opening of US markets on Friday, 13 January 2012. US shares closed higher on Thursday as bullish euro zone rate auctions helped offset weak domestic economic numbers. A report indicating that more Americans filed for unemployment benefits last week than forecast added to speculation that the US recovery may be slowing. US retail sales in December also failed to meet forecasts.