European stocks advance ahead of EU summit

Global stock markets gained ground Wednesday on the eve of an EU summit that investors hoped would deliver firm action to contain the eurozone debt crisis amid chronic tension that focused on Spain. In Berlin however, German Chancellor Angela Merkel stressed in a speech to lawmakers that there were "no quick, no easy" solutions to the debt crisis. A day before EU leaders gathered in Brussels to search for credible ways to deal with the situation, Merkel warned there was no "magic formula" and urged that problems dogging the 17-nation bloc be tackled at their roots. But with investors said to be "sanguine" ahead of the two-day summit, London's benchmark FTSE 100 index of leading shares gained a solid 1.41 percent to close at 5,523.92 points. Frankfurt's DAX 30 added 1.50 percent to 6,228.99 points and in Paris the CAC 40 climbed 1.67 percent to 3,063.12. Madrid's IBEX 35 index leapt by 2.12 percent to 6,666.90 points. In foreign exchange deals, the euro dipped to $1.2457 from $1.2495 late on Tuesday in New York. "Gains are underpinned by euro-positive headlines from the EU and strong data from the US," ETX Capital trader Ishaq Siddiqi commented. "The Eurogroup saying the EFSF can provide financial assistance to Spain until the ESM is ready, together with it welcoming a bailout request from Cyprus has left clients feeling rather sanguine this afternoon," he added. The eurogroup of finance ministers has approved financial aid for Spanish banks by the temporary European Financial Stability Facility and its successor, the European Stability Mechanism (ESM), which is to take effect in July. In midday New York trading, the Dow Jones Industrial Average was up by 0.78 percent at 12,632.99 points, while the S&P 500 index had advanced by 0.93 percent to 1,332.20 and the tech-rich Nasdaq showed a gain of 0.94 percent at 2,881.03. Good news from the United States included a pending home sales report that returned to March's two-year high in May, along with a solid increase in durable goods orders. Most Asian markets had closed higher earlier in the day, with Tokyo up 0.77 percent at 8,730.49, and Hong Kong adding 1.03 percent to 19,176.95 points. Back in Europe, EU leaders were to meet in Brussels for two days of talks from Thursday to consider proposals to give EU authorities more power over national budgets, and to centralise banking supervision. In company news, a huge planned merger between commodities giants Glencore and Xstrata was thrown into doubt after the sovereign wealth fund of Qatar, Xstrata's second-largest shareholder, opposed the deal's terms. Qatar Holdings said in a statement to the London Stock Exchange that "whilst it sees merit in a combination of the two companies, it is seeking improved merger terms." Both Switzerland-based Glencore and Xstrata are listed in London. Glencore and Xstrata formalised in February a highly anticipated deal to create a raw materials juggernaut with a market capitalisation of $90 billion (72 billion euros). Glencore shares ended the day down 1.45 percent at 298.30 pence and Xstrata rose by 1.37 percent to 796.60 pence.