Czech Stocks Climb Most in 11 Months After U.S. Budget Agreement

Czech stocks jumped, lifting the main index the most in almost 11 months, as U.S. lawmakers’ agreement on the budget boosted investor optimism about the global recovery.

The PX gauge of 13 companies rose 2.6 percent to 1,066.01 by close in Prague, its steepest one-day advance since Jan. 26, 2012, and its highest level since August 2011. Erste Group Bank AG of Austria, which has a 21 percent weighting in the Czech index, rallied 4.1 percent.

Financial companies were among the biggest gainers in Europe after the U.S. House of Representatives passed a bill that averted spending cuts and tax increases threatening a recovery in the world’s largest economy. Republicans vowed to fight President Barack Obama in coming weeks for spending cuts in exchange for raising the debt ceiling.

“A fall off the so-called fiscal cliff has been averted in the last minute,” Jiri Simara, a stock analyst at Cyrrus AS brokerage in Brno, Czech Republic, wrote in a report today. “While uncertainty remains, even the partial solution was enough to give strong gains to stock indexes.”

New World Resources Plc, the biggest Czech producer of coking coal and the most-traded stock in Prague today, jumped 3.5 percent to 101 koruna, its highest close since July 19. Europe’s benchmark coal contract, which lost 15 percent last year, surged 8 percent to $102.55 a metric ton today in the Netherlands, the steepest advance in three years.

The PX index increased 14 percent in 2012, the same as for the Stoxx Europe 600 Index and compared with a 13 percent gain by the MSCI World Index and 15 percent for the MSCI Emerging Markets Index. The 14-day relative strength index for the Czech gauge rose to 78 today, above the 70 level that suggests in technical analysis the asset may be overbought and poised for a retreat.

Before it's here, it's on the Bloomberg Terminal.