Investors greet European deal with cautious optimism
The summit in Brussels was billed as the last chance to end a crisis that has wreaked havoc on the European economy for over a year.
The deal announced early Friday is designed to draw the European Union closer together fiscally, and to punish member nations that run large deficits. But important details of the deal have not been worked out and a number of European Union members, including Great Britain, have not signed on.
"The fiscal language looks to be copied and pasted from the original Stability and Growth Pact with a few bells and whistles added to imply that 'this time we mean it,''' Citigroup strategist Steven Englander wrote in a note to clients.
The deal has been enough to send stocks up modestly Friday morning, but investors are not signaling that they see an immediate end to the troubles in Europe. The Dow Jones industrial average was up 154.32, or 1.29%, to 12,105.90 in early trading. Leading indexes were up 1.8% in Germany and 2.1% in France.
Much of the attention now turns to the European Central Bank and its president, Mario Draghi, who has been cautious about committing the bank's resources to helping prop up the continent's weaker economies. Draghi greeted the deal with careful optimism.
"It's going to be the basis for a good fiscal compact and more discipline in economic policy in the euro area members," Draghi said. "We came to conclusions that will have to be fleshed out more in the coming days."
-- Nathaniel Popper
Photo: France's President Nicolas Sarkozy, left, talks with Germany's Chancellor Angela Merkel and European Commission President Jose Manuel Barroso at a European Union summit in Brussels on Friday. Credit: Yves Herman / Reuters