World stocks climb as investors upbeat after EU summit

Global stock markets rose and the euro rallied on Monday as investors gave a cautious welcome to the weekend\'s EU summit, at which \"good progress\" was made towards resolving the sovereign debt crisis. European equities advanced, in the wake of bumper gains across Asia, as the region\'s leaders held a crucial Brussels summit on the long-running crisis that has threatened to plunge the world economy back into recession. In early morning deals, London\'s benchmark FTSE 100 index added 0.52 percent to 5,517 points, Frankfurt\'s DAX 30 gained 0.98 percent to 6,028.40 points and in Paris the CAC 40 increased by 0.32 percent to 3,181.63. The euro soared to $1.3954, hitting the highest level since September 8, as investors became more willing to take risks because of easing debt crisis concerns. It later pulled back to $1.3876, from $1.3894 late on Friday. European leaders, including French President Nicolas Sarkozy and IMF chief Christine Lagarde, on Sunday said \"good progress\" had been made in talks on the debt crisis that has threatened the world economy. However, they announced few details, vowing instead to reveal all at a second summit on Wednesday. \"The initial market reaction to the weekend meetings of European officials seems to elicit a cautiously optimistic wait-and-see attitude\" among investors, said Lloyds analyst Eric Wand. The eurozone wants to beef up its 440-billion-euro ($610 billion) rescue fund, the European Financial Stability Facility, to convince markets it has the means to protect highly indebted nations such as Italy and Greece. \"Investors are awaiting the next EU summit on Wednesday, which should produce final decisions on the three-prong strategy to deal with eurozone crisis involving measures to recapitalize European banks, leverage the EFSF and provide greater debt relief for Greece,\" said Citi analyst Valentin Marinov. \"The meetings over the weekend provided more clarity about what to expect,\" he added. European leaders also achieved breakthroughs on two related and complex issues, managing a huge write-down on the debt of stricken Greece and making sure banks had enough resources to withstand these losses. The EU wants banks to raise their core capital reserves to ensure these losses do not drag them into the mire. An estimated 107-108 billion euros would be required, diplomats said. Leaders also urged Italian Prime Minister Silvio Berlusconi to fulfill pledges to cut Italy\'s huge debt and stop eurozone debt contagion. Meanwhile, the dollar flattened against the yen on Monday after Japan\'s finance minister again warned he could take action to stem the currency\'s strength. The safe-haven yen had struck a record post-war dollar high on Friday. \"The safe-haven currencies of the US dollar and the yen continue to pare some of their recent gains as the near-term improvement in risk sentiment extends,\" said economist at The Bank of Tokyo-Mitsubishi UFJ in London. \"The easing of safe-haven demand reflects renewed optimism that escalating sovereign debt strains in the eurozone can be significantly improved at least in the near-term supporting the global growth outlook. \"Unsurprisingly the euro has been one of the main beneficiaries of the blind hope that is now dominating financial market direction.\" Asian equities surged following the eagerly-awaited Brussels gathering. Tokyo jumped 1.90 percent, Sydney rallied 2.73 percent and Seoul leapt 3.26 percent. Elsewhere, Hong Kong jumped 4.14 percent and China rallied 2.29 percent in value, with sentiment also boosted by impressive Chinese manufacturing data. Manufacturing activity in China hit a five-month high in October, lifted by a pick-up in output and orders despite global economic turmoil, HSBC said Monday. The preliminary HSBC purchasing managers\' index (PMI) stood at 51.1 in October, up from 49.9 in September and the first time it has gone above 50 since June, the British banking giant said in a statement. A reading above 50 indicates the sector is expanding, while a reading below 50 suggests a contraction.