Spain makes cuts, Euro Stocks grow

World stock markets and the euro advanced Wednesday after Spain unveiled new spending cuts which helped offset worries about the continent's debt crisis. Britain's financial markets meanwhile gave a cautiously positive response to the establishment of the country's first coalition government since World War II.

Solid German economic growth figures - Europe's biggest economy expanded by a modestly higher than expected 0.2 percent in the first three months of the year - also helped fuel the rally, particularly in Frankfurt, where the DAX was up 155.75 points, or 2.6 percent, at 6,193.46.

The CAC-40 in France was 49.16 points, or 1.3 percent, higher at 3,742.39.

On Wall Street, the Dow Jones industrial average was up 84.34 points, or 0.8 percent, at 10,832.60 soon after the open while the broader Standard & Poor's 500 index rose 10.03 points, or 0.9 percent, at 1,165.82.

Better than expected growth in Germany also helped relieve pressure on the euro - by mid afternoon London time, the euro was trading 0.5 percent higher at $1.2706.

However, the euro's medium-term fortunes are likely to depend on the debt crisis that has already seen Greece bailed out by its partners in the eurozone and the International Monetary Fund, and forced European policymakers to unveil a euro750 billion financial support package for the single currency zone.

The news that Spain aims to cut its budget deficit by a further 1.5 percentage point to 6 percent of the country's gross domestic product in 2012 has also helped calm jittery markets.


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