Brent gains on euro debt steps
London, October 10, 2011
Brent crude futures gained ground on Monday after France and Germany said they would come up with a plan to contain the euro zone crisis, but details will not emerge until the end of the month.
Market sentiment improved after leaders of the two countries vowed on Sunday to develop a new plan to deal with Greece's debt issues and recapitalise euro zone banks, although a breakdown of the plan would not be available until the Cannes G20 summit on November 3-4.
A spokesman for the German government emphasised that the confidential talks, aimed to help the euro zone regain confidence among investors, are no 'miracle cure'.
Crude futures and the euro rose, but equity markets showed a more muted reaction. "All that has happened is they've postponed the decision once more: they've kicked the can down to Cannes," CMC markets analyst Michael Hewson said. "We're slightly more positive, but we're not out of the woods yet."
November Brent crude futures were $1.14 firmer at $107.02 a barrel by 1120 GMT. The contract posted an increase of 4.5 percent last week, its best performance since the week to July 8.
US November crude led the gains and was up $1.44 at $84.42 a barrel, after hitting $84.72 earlier.
German Chancellor Angela Merkel and French President Nicolas Sarkozy said on Sunday their goal was to come up with a sustainable answer for Greece's woes, agree how to recapitalise European banks and present a plan for accelerating economic coordination in the euro zone by a G20 summit in Cannes on November
"Merkel and Sarkozy met again and could not decide anything apart from trying to reassure us that they will have some proposals out before the G-20 meeting," Petromatrix's Olivier Jakob said in a note to clients. "New proposals by the end of the month do not necessarily translate into any action in the short term."
"At some point, words will need to be replaced by concrete action," MF Global analysts wrote in their morning note.
The board of Franco-Belgian Dexia bank also accepted on Monday a rescue plan drawn up by the governments of France, Belgium and Luxembourg after it became the first bank to become a casualty of the two-year-old euro zone debt crisis. - Reuters