German Court Ruling Spurs Demand for Financials


LONDON -- European equity markets have been trading higher this morning, boosted after a German constitutional court found that the country can ratify the European Stability Mechanism, bringing about hopes that the economic bloc may be ready to get to grips with the debt and liquidity crisis that has plagued member states during the last few years. With the news, financial stocks have led the way up, and the high-beta sector seems likely to benefit from an economic recovery.

As would be expected, the countries suffering the worst debt troubles, the European peripherals, are those benefiting the most today. Spain's IBEX (INDEX: ^IBEX) is up almost 1%.

As always, the following price moves are based on this morning's European trading.

The decision by the German court and renewed hopes that the worst of the debt crisis is behind us have been boosting banking, insurance, and other financial stocks across the board. Notably, Dutch lender ING Groep (NYS: ING) has been seeing some of the best performance, climbing more than 3% as it gains additional momentum through dip-buying following a slump yesterday. The parliamentary elections today did bring about some concern that whoever wins, Dutch banks will be taking a hit, but these have been more than offset by the broader optimism sweeping financials.

Elsewhere, Finnish handset maker Nokia (NYS: NOK) is once again seeing some of the most significant moves on the continent, up 5% as demand continues to flood to the stock following the release of its latest Lumia smartphone range last week. Today's release by rival firm Apple is doing little to subdue the positive sentiment surrounding the company.

Nokia also announced today that it would offer a slimmed-down version of the Windows 8 operating system to older phones in the Lumia range. The software, created by Microsoft, was a key selling feature of the latest Nokia phones, the Lumia 920 and 820, and the company has now said it will now make a similar but less functional version available for older smartphones. This will change many aspects of the phones, from the start screen to Bluetooth connectivity and media functionality.

On a more negative note, Anheuser-Busch InBev (NYS: BUD) , the brewing giant and maker of Stella Artois, is down more than 1.5% as news emerged that its claim to the EUwide trademark on the word "Bud," for beer, is based on a fraud stretching longer than a century. The argument put forward by Budvar, a Czech competitor, suggests that when the founder of Anheuser visited the town of Budweis in the Czech Republic in 1894, he enjoyed the beer so much that he went back to the U.S. and brewed a new beer in the same way. The court case has been going on in one form or another for 16 years, and if the courts eventually find that the trademark is in breech, it may be a blow to Anheuser.

As always, this morning's European news saw some winners and losers -- and perhaps some European buying opportunities. Indeed, legendary investor Warren Buffett has recently spent more than $1 billion buying the stock of a prominent European large cap.

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