European credit default swaps tightened on Friday, in line with a share rally, after better-than-expected US home sales added to a sharp rise in the eurozone purchasing managers index to boost recovery hopes. By 1444 GMT, the investment-grade Markit iTraxx Europe index was at 92.5 basis points, according to data from Markit, 5.5 basis points tighter versus late on Thursday.
The Markit iTraxx Crossover index, made up of 44 mostly "junk"-rated credits, was at 608 basis points, 19 basis points tighter. "The gain in existing home sales was the largest on record for the series since 1999", although surveys show that many of the sales are occurring in distressed properties and foreclosure filings continue to rise, said Calyon Capital Markets Research in a note to investors.
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