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Stocks Advance on Spain, Greece Announcements


NEW YORK ( TheStreet) -- Stock futures were advancing Monday after Greece said it would buy back as much as €10 billion in outstanding debt and Spain made an official request for European Union bank bailout funds from the permanent European Stability Mechanism fund.

Spain is set to receive €37 billion for the recapitalization of four banks.

Investors were also awaiting manufacturing and construction data out of the U.S. and continued to keep an eye on the "fiscal cliff" talks.

Futures for the Dow Jones Industrial Average were up 50 points, or 50.42 points above fair value, at 13,058. Futures for the S&P 500 were up 5.80 points, or 5.92 points above fair value, at 1420. Futures for the Nasdaq were rising 16.75 points, or 17.02 points above fair value, at 2693.

"Futures reached new highs as the emailed statement from the Economy Ministry hit the wires," said Andrew Wilkinson, chief economic strategist at Miller Tabak. "The market has settled somewhat as speculators realize that this is not the same as an official request for state-wide aid. Such a request is now unlikely before 2013 given the comfortable state of health for government funding for this year."

"The second driver of risk-asset strength to start the week is the announcement of an official Greek government plan to buy back ... its outstanding debt," said Wilkinson. "The plan is a requirement of the recent IMF and EU agreement to release the next wave of previously agreed financial assistance for the debt-strapped nation, and if successful will help Greece reach the IMF's target for reducing outstanding debt-to-GDP to 120% by 2020."

Another bright spot for the markets Monday was the read on the HSBC Purchasing Managers' Index for China -- a composite indicator designed to give a single-figure snapshot of operating conditions in the manufacturing economy. It came in at 50.5 in November, up from 49.5 in October and signaling a marginal improvement of operating conditions in the Chinese manufacturing sector.

U.S. stocks made up losses late in the day Friday, ending mostly flat, as investors watched signs of gridlock in talks on the so-called fiscal cliff.

Over the weekend, U.S. Treasury Secretary Timothy Geithner indicated that he's certain the Republicans will concede to raising taxes on the rich, while House Speaker John Boehner didn't seem to think so.

"Press coverage on the fiscal cliff abounds, but there has been disappointingly little tangible progress," said Michala Marcussen, head of global economics at Societe Generale. "Should negotiations fail and the cliff come into effect (a scenario that we put a 10% probability on), the impact would be very disruptive for both markets and the real economy. Note, in this tail risk scenario, we see a 90% probability that the cliff would then be dealt with retroactively, keeping the U.S. economy out of recession."