By V. Phani Kumar, MarketWatch
LONDON (MarketWatch) — Crude-oil futures set out on a path to clinch their biggest percentage gain in two months in electronic trading Monday, as news of a bailout for Spanish banks soothed investor worries about the euro-zone debt crisis — for the moment.
U.S. benchmark light, sweet crude-oil futures for delivery in July CLN2 +1.27% climbed $1.38, or 1.6%, to $85.43 a barrel during European trading hours. The front-month contract had risen as high as $86.63 earlier in the session.
The performance marked a sharp rebound for the contract, after it slid 72 cents Friday on the New York Mercantile Exchange.
The advance came after Spain on Saturday agreed to receive €100 billion ($125 billion) EURUSD -0.5974% in financial aid for its struggling banking sector from the European Union. Spanish bank aid
Investors across asset classes cheered the news, as the loans will provide much needed capital to Spanish lenders — which are struggling after the collapse of a real-estate bubble — without stretching Madrid’s own finances, which are also under pressure amid weak economic conditions.
Reflecting improved risk appetite, the ICE dollar index DXY -0.33% , which measures the greenback against a basket of six major currencies, tumbled to 81.954 from 82.439 Friday in North America.
Dow Jones Industrial Average DJIA +0.75% futures climbed 128 points, or 1%, to 12,631. And yields on the benchmark 10-year U.S. Treasury bonds 10_YEAR -0.06% rose 7 basis points to 1.70%, coming further off the record lows hit recently.
In Europe, stocks rallied after the news from Spain with the Stoxx Europe 600 index XX:SXXP +1.03% trading 1.8% higher at 246.33. Europe Markets
But several analysts advised caution ahead of the weekend elections in Greece, which could potentially decide whether the nation will remain in the euro zone.
“We expect the prospect of voters in this Sunday’s Greek election doing the wrong thing, as far as investors are concerned, will overhang financial markets until the wisdom of crowds gets a better handle on the outcome of what presently is a very close race,” said Tim Condon, head of research for Asia at ING Financial Markets Research.
Among other products in the energy complex, July futures for gasoline RBN2 +1.07% and heating oil HON2 +1.10% rose by 1% to $2.71 per gallon and by 1% to $2.70 per gallon, respectively.
Natural-gas futures NGN12 -1.83% , also due for delivery next month, dropped 2% to $2.25 per million British thermal units.
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.
