Europe chemical stocks show gains on Germany court bailout vote

12 September 2012 11:30  [Source: ICIS news]

Europe chemical stocks riseLONDON (ICIS)--European chemical stocks rose on Wednesday, in line with financial markets, after Germany’s Constitutional Court rejected claims the new European Stability Mechanism (ESM), a permanent eurozone bailout fund, went against German law.

German citizens and lawmakers had brought forward a case calling for the court to block the ESM, stating the mechanism would commit the country to potentially unlimited funding of the weakest eurozone economies.

The maximum lending capacity of the ESM, which is expected to go into effect in October, is €500bn ($641m) and Germany is a lynchpin in its operation. The bailout fund is important as it will loan much-needed money to debt-ridden eurozone states on the brink of going bust. Relieved investors had feared a ruling to reject Germany’s participation in the ESM would destroy any hopes of a future recovery.

The court, however, did impose conditions on its judgement and said the German government must limit the country’s liabilities under the ESM. The court’s decision now paves the way for its ratification by German President Joachim Gauck.

At 10:12 GMT, the UK’s FTSE 100 was up by 0.26%, Germany’s DAX had risen by 2.23%, and the CAC 40 in France was up by 1.54%.

At the same time, the Dow Jones Euro Stoxx Chemicals index was up by 0.98%, as shares in many of Europe’s major chemical companies rose from the previous close.

Chemical producer BASF’s shares had risen by 1.10%, while fellow Germany-based chemical company Bayer’s shares were trading up by 1.34%.

Switzerland-based company Clariant’s shares were trading up by 1.97% from the previous close, French specialty chemical group Arkema’s shares were trading 2.70% higher from the previous close, while Norway-based fertilizer producer Yara International’s shares were trading up by 0.81% on the previous close.

($1 = €0.78)

By: Franco Capaldo
+44 (0)20 8652 3214

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