Euro rises on speculation of Greece bailout

Euro rises on speculation of Greece bailout
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First Published: Tue, Feb 09 2010. 08 53 PM IST
Updated: Tue, Feb 09 2010. 08 53 PM IST
London: The euro rose on Tuesday on speculation that European Union (EU) nations could bail out errant member Greece, while global stocks inched higher, lifted by emerging market shares.
Wall Street looked set to open stronger.
Expectations about a rescue for Greece followed news that European Central Bank president Jean-Claude Trichet was leaving a meeting of central bankers in Sydney early to attend an EU leaders’ summit.
EU officials later clarified that Trichet’s early return to Europe from a trip to Australia had been long-planned, but it nonetheless fuelled speculation of a bailout.
EU leaders will hold a special summit on the economy on Thursday in Brussels amid increasing worries that Greece and other so-called peripheral euro zone economies cannot handle their debts and deficits.
Concerns about the euro zone’s sovereign debt troubles have battered financial markets this year, even pressuring US banks on Wall Street on Monday.
The euro was up o.5% at $1.3725 and 0.9% at 123.02 yen.
“We are seeing a squeeze of some short euro positions which were established at low levels as market speculation of a Greek bailout is seen as positive in the near-term,” said Antje Praefcke, currency strategist at Commerzbank in Frankfurt.
The euro is down 4% against the dollar this year and 7.5% against the yen, in part because of concerns over debt.
The dollar was off a quarter of a per cent against a basket of major currencies.
World stocks as measured by MSCI rose 0.2%, lifted mainly by gains of 1% in their emerging market component. Chinese and Hong Kong shares were generally higher, cheered by higher commodity prices.
In Europe, the FTSEurofirst 300 was flat to higher with year-to-date losses now around 6%.
A number of worries have hammered the market following last year’s large gains.
“Investors are rightly concerned about the timing of the removal of extraordinary loose fiscal and monetary policy. The risk of default has increased and there is an uncertainty over financial regulation,” said Henk Potts, equity strategist at Barclays Wealth.
Earlier, Japan’s Nikkei edged down 0.2% to a two-month closing low. Toyota Motor Corp., whose shares have lost around one-fifth of their value since late January, rose on short-covering with investors welcoming signs it was taking steps to deal with its safety problems.
Atul Prakash and Neal Armstrong contributed to this story.
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First Published: Tue, Feb 09 2010. 08 53 PM IST