Off the Charts: Investors in Europe See a Glass Half Full and Rising

Or at least investors seem to believe they are.

A survey of investor sentiment in the euro zone this month moved into positive territory for the first time since the summer of 2011. European stocks have been rising for more than a year, with bank stocks leading the way. The yields on Spanish and Italian government bonds — which were more than five percentage points higher than German bonds’ last summer — now have spreads half that level.

It was last summer that the European Central Bank took steps to get needed cash into the hands of banks, ending the immediate fears of a collapse of the euro zone. But much remains to be done.

The German elections next weekend have delayed a lot of decisions. The widespread assumption is that Angela Merkel will remain chancellor, but it is not clear if the current coalition with the Free Democrats will be able to survive. If not, she may have to turn to the opposition Social Democrats and try to form a grand coalition.

There is also wide speculation about the health of European banks. In the summer of 2012, the European Central Bank took steps to provide low-cost loans to banks to buy bonds issued by their own governments, and some did, particularly in Italy and Spain.

When there are new stress tests next year — conducted for the first time in the same way in all countries across the euro zone — some analysts fear that banks may be forced to hold more capital if they have such bonds. Conceivably, such a requirement may lead the banks to sell such bonds, driving prices down and yields up and damaging the confidence that has been growing.

But none of that has so far held back investor enthusiasm. An index of European bank stocks, shown in the accompanying chart, is up by almost half since the end of 2011, although it remains more than 60 percent below its 2007 peak.

The Sentix measure of investor confidence in the euro countries climbed into positive territory this month for the first time since 2011, and it did so largely because of optimism for the future. The measure is based on questions asked of investors, and it now finds institutional investors more confident than retail investors.

Sentiment regarding current conditions has risen, but it is still negative, according to the survey. But when investors were asked about conditions six months from now, the level of optimism has risen to the highest level since the spring of 2006, well before the recession.

It may be noted that all this enthusiasm has come despite continuing declines in gross domestic product in many countries in the zone, and despite high levels of unemployment. To some extent, it no doubt both reflects the improvements in the stock and bond markets and is a cause of them.

Does all this show foolish complacency? Or does it reflect an awareness that the worst is over for the peripheral countries in the euro zone, with recovery on the horizon? By next summer, we may have the answer.

Floyd Norris comments on finance and the economy at nytimes.com/economix.

This article has been revised to reflect the following correction:

Correction: September 14, 2013

An earlier version of this article incorrectly identified the German party that formed a coalition with the Christian Democrats, Angela Merkel’s party. The coalition is with the Free Democrats, not the Liberal Democrats.

Bits Blog: Trying to Make Google Glass Fashionable

DealBook: Bondholders and Mexico Glass Maker Reach Deal

Steve Marcus/ReutersPaul Singer, chief of the hedge fund Elliott Management.

MEXICO CITY — The giant Monterrey glassmaker Vitro said Monday that it had reached an agreement with bondholders, ending a dispute among powerful financiers that had ricocheted between Mexican and American courts.

Under the agreement, Fintech, which is owned by the Monterrey-born investor David Martinez, will buy the bonds held by a group of hedge funds and pay additional cash to cover legal fees. In return, Fintech will receive a 13 percent stake in a Vitro subsidiary and a $235 million note issued by the subsidiary.

Bondholders will receive 85.25 cents on the dollar for their bonds, according to the agreement. The company said that Fintech would buy a “substantial majority” of the $729 million in bonds that are in dispute.

The legal fight had produced ripple effects in the emerging debt markets. For example, Cemex, one of the world’s largest building materials companies, was forced to sign a “Vitro clause” when it issued debt last year. Cemex, with a reputation for strong corporate governance and a company that is also based in Monterrey, Mexico’s industrial heartland, promised debtors that it would not grant subsidiaries or related-party creditors the same rights as bondholders.

“Ever since Vitro came out with this cockamamie scheme,” there has been uncertainty about bankruptcy proceedings in Mexico, said Arturo C. Porzecanski, economist in residence at American University’s School of International Service.

The Vitro bondholders had been fighting the company in United States courts, arguing that Vitro borrowed money from its subsidiaries, turning them into new creditors who then outvoted bondholders on a plan to restructure $1.2 billion in defaulted debt.

A Monterrey court approved the plan in February 2012, where bondholders who agreed to the new financial plan received almost 69 cents on the dollar for their debt, according to James V. Harper, the head of research at BCP Securities in Greenwich, Conn.

But several giant hedge funds, including Elliott Management and Aurelius Capital Management, held out. Elliott Management is run by Paul E. Singer, who has made a career out of extracting payments from debtors that have defaulted.

Instead, the funds asked American courts to reject the Mexican bankruptcy plan, calling it “a testimony to audacity, brazen manipulation and greed.”

Last June, Judge Harlin DeWayne of the Federal Bankruptcy Court in Dallas refused to apply the Mexican bankruptcy plan in the United States. A federal appeals court upheld the judge’s decision in November.

Mr. Harper said those decisions removed any legal bankruptcy protection for Vitro in the United States and forced it to negotiate. “I think they were surprised when they didn’t get it,” he said. “I don’t think they counted on such aggressive opposition.”

Without protection, Vitro might have faced collection efforts on its sales in the United States, which amounted to $446 million last year.

It is rare for an American judge to refuse to enforce another country’s bankruptcy law in the United States, Mr. Harper said. “That was a substantial setback for Vitro and a substantial victory for the holdouts.”

Noting that the Mexican government had filed a brief in support of Vitro, Mr. Porzecanski, the economist, said, “The fact that the workout process was not recognized in the United States leaves Mexico with a black eye.”

Under the agreement announced Monday, Vitro and the bondholders agreed to drop all legal disputes.

“These agreements allow us to close the book on a challenging period for our company, and focus entirely on our business and meeting our customers’ needs,” said Vitro’s chairman, Adrián G. Sada.

It was Fintech’s owner, Mr. Martinez, who helped Vitro put together a plan to revamp its finances. Mr. Martinez remains a mystery, despite being known as a collector of art and owner of one of the most expensive apartments in Manhattan, atop the Time Warner Center.

“Fintech’s participation was crucial in order to establish the foundation for the agreements we have reached,” Claudio Del Valle, Vitro’s chief restructuring officer, said in a statement.