By Marc Jones
LONDON (Reuters) - Europe's markets rallied on Monday on signs that Italy was preparing to rework the spending plans that have fuelled tensions with the European Union, while Wall Street futures were looking for post-Black Friday pick-me-up.
A bounce in oil after its own "black" Friday, the survival chances of Britain's newly sealed Brexit agreement and renewed Russia and Ukraine tensions had all kept Europe's traders busy, but it was Italy that stole the show.
Deputy Prime Minister Matteo Salvini had hinted over the weekend at the possibility of tweaking the country's budget deficit goal, saying "no one is stuck" to the 2.4 percent target and there was talk on Monday of closer to 2 percent.
Italy's banks index duly leapt 5 percent towards its strongest day since June and an equally strong rally in bond markets sent Italian borrowing costs to their lowest since September.
"It will help the banks if the BTP-Bund spread goes lower which it has been this morning," Pierre Bose, head of European strategy at Credit Suisse Wealth Management, said.
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"You potentially move from a negative spiral to a more positive spiral where you end up with less pressure on the banks, more ability to lend and that will underpin growth in a better fashion."
The euro also climbed, rising 0.25 percent to $1.1370 and as much as 0.7 percent at 128.73 yen, though it lost a bit of traction after Germany's monthly Ifo survey showed a larger-than-expected drop in business morale.
"The (Ifo) index's fall is somewhat alarming," Uwe Burkert of LBBW wrote in a note. "It was generally expected that the economic weakness of the third quarter would be corrected with a firmly positive growth figure in the fourth quarter."
There was also a 0.3 percent rise for the pound against the dollar after Britain and European Union reached an agreement over Brexit plans on Sunday.
It was flat against the euro, though, and analysts remain cautious that the Brexit deal faces stiff opposition within the British parliament, which will is expected to vote on the agreement in around two weeks' time.
"The failure of the pound to rally on recent positive developments suggest the market is pricing in that the deal won't pass the first time in parliament," said Lee Hardman, a currency analyst at MUFG.
"During the next two weeks the pound will likely trade with increased volatility," he added.
BLACK FRIDAY
Wall Street stock futures firmed up after another negative session on Friday had seen the S&P 500 record its lowest close in six months, more than 10 percent down from September's peaks, and pushed it back in 'correction' territory.
Signs that shoppers had succumbed to deep discounts offered on Black Friday and Cyber Monday saw Amazon shares jump 2.7 percent and eBay gain 2.1 percent in premarket trading.
Heavy oil price losses that sent Brent crude plunging below $58 per barrel had dragged energy stocks lower on Friday. Brent, hit by growing signs of crude oversupply on world markets as demand ebbs, clawed back lost ground on Monday but was struggling to get much above $60.
Both U.S. WTI and Brent futures are down more than 20 percent this month, and unless they recover further this week the losses would mark their biggest fall since October 2008.
Brent crude futures last stood at $60.15 per barrel, up 2.3 percent in London. U.S. crude futures last fetched $51.23 per barrel, up 1.6 percent on the day and off Friday's low of $50.15.
"It is difficult to say whether $60 is the new normal, as there doesn't seem to be a 'normal' at the moment," Cantor Fitzgerald oil and gas analyst Jack Allardyce said.
Overnight in Asia, MSCI's broadest index of the region's shares excluding Japan edged up 0.6 percent, led by gains in Hong Kong and Taiwan, while Japan's Nikkei advanced 0.8 percent.
In China, the Shanghai composite index eased 0.1 percent, though, and Bitcoin extended its recent wrechid run, dropping more than 5 percent from the day's highs as selling in cryptocurrencies returned.
Bitcoin was last trading at $3,880 -- holding above the 2018 lows it hit last week but it has lost around three quarters of its value this year.
Russian and Ukraine bonds also saw some notable selling after Russia seize three Ukrainian naval ships off the coast of Crimea that Russian authorities said had illegally entered its waters.
With relations still raw after the 2014 annexation of Crimea, the incident risks pushing the two countries towards a wider conflict and is likely to renew Western calls for more sanctions on Moscow.
Gold, meanwhile, rose as fears of a slowdown in global economic growth and uncertainty surrounding the U.S. interest rate trajectory and U.S. China trade tensions bolstered the metal's appeal ahead of a G20 meeting at the end of the week.
(Additional reporting by Helen Reid, Saikat Chatterjee and Amanda Cooper in London, Editing by Alison Williams)