Europe chem stocks rise as central banks prepare economic stimulus

15 June 2012 14:44  [Source: ICIS news]

LONDON (ICIS)--European chemical stocks rose on Friday, in line with financial markets, amid hopes that global central banks will step in to provide fiscal stimulus to avoid a deeper financial crisis if Greece fails to form a government this weekend.

Investor concerns were lifted after news agency Reuters reported that global central banks are preparing to intervene if the economy worsens.

The European Central Bank (ECB) said it will continue to provide banks with financial stimulus if necessary.

Speaking at the 14th ECB and its Watchers Conference, ECB president, Mario Draghi, said the bank has the crucial role of "providing liquidity to sound bank counterparties in return for adequate collateral".

“This is what we have done throughout the crisis, faithful to our mandate of maintaining price stability over the medium term – and this is what we will continue to do. The eurosystem will continue to supply liquidity to solvent banks where needed,” he added.

Investors were cautious this week as concerns continued over the possibility that Greece will fail to form a government that supports the fiscal measures attached with a bailout package.

If the elected government refuses the terms, there is a strong possibility Greece could leave the eurozone, which many fear could break up the single currency.

At 12:56 GMT, the UK’s FTSE 100 financial market was up by 0.29%, Germany’s DAX rose by 1.17%, and the CAC 40 in France was up by 1.43%.

With European indices trading higher, the Dow Jones Euro Stoxx Chemicals index was up by 0.94%, as shares in many of Europe’s major chemical companies were up from the previous close.

Petrochemical major BASF’s shares were up by 1.16%, while fellow Germany-based chemical company Wacker Chemie’s shares were trading up by 2.87%.

Shares in Germany’s LANXESS were up by 2.48%, while Switzerland-based company Clariant’s shares were trading up by 1.90% from the previous close.

France-based Arkema’s shares were trading up by 3.33% from the previous close.

In related news, the Bank of England announced earlier on Friday its plans to launch a multi-billion stimulus package in response to the worsening outlook of the UK economy.

Earlier in the week, investor confidence was damaged as Spanish 10-year yield bonds exceeded 7%, following the downgrade of Spain's and Cyprus’ government bond ratings by ratings agency Moody’s.

By: Leigh Stringer
+44 208 652 3214

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