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Stocks lifted by last-ditch debt deal optimism
by Chris Marshall on Oct 16, 2013 at 15:35
UPDATE: Shares in Europe reversed their earlier losses, while Wall Street surged higher as investors cheered reports that US politicians will agree on a last minute deal to raise the debt limit.
According to reports, the US Senate is expected to agree a bill to end the 16 day government shutdown and prevent the debt default that famous investor Warren Buffett warned would be ‘pure idiocy’.
Aides to both Republican and Democrat Senate leaders had been working through the night on a deal, according to the New York Times.
Britain’s FTSE 100, which had spent the morning in the doldrums, rose by 0.4%, to 6,574. Europe’s Stoxx 50 similarly saw off earlier negativity to rise 0.2%.
In the US, the Dow and S&P 500 indices both jumped 1% higher.
The US dollar rose against the yen, euro and British pound.
The gold price dropped 0.5% to $1,273.
Woodford weighs as US default fears hit FTSE (10:11)
The unanswered threat of a US debt default sent European stocks decidedly lower on Wednesday morning, while several individual shares were suffering from the fallout of Neil Woodford announcing his resignation from Invesco Perpetual.
US politicians have still not managed to raise the country's borrowing limit ahead of tomorrow’s deadline, but the lack of total market chaos suggests investors still believe a last-minute deal will be found.
Ratings agency Fitch put the US credit rating on ‘negative watch’ yesterday evening, which could result in the country losing its AAA rating.
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