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World stocks buoyed by earnings despite Greek fears

World stocks buoyed by earnings despite Greek fears
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First Published: Tue, Feb 16 2010. 10 20 PM IST
Updated: Tue, Feb 16 2010. 10 20 PM IST
London: World markets mostly rose Tuesday after strong earnings from British bank Barclays Plc and US conglomerate Kraft Foods Inc., although investors remained worried by the debt crisis enveloping Greece.
In Europe, the FTSE 100 index of leading British shares led the way, rising 41.33 points, or 0.8%, to 5,208.80. Barclays spiked 6.5% after it reported a fourth quarter profit of £6.9 billion ($10.8 billion), more than eight times larger than a year earlier, largely because of the sale of one of its businesses.
Royal Bank of Scotland Group Plc, which is over 80% owned by the UK government, and Lloyds Banking Group Plc, which is 41% state-owned, both advanced in Barclays’ slipstream.
Deutsche Bank AG and Credit Agricole SA also enjoyed solid gains, helping Germany’s DAX to rise 23.79 points, or 0.4%, to 5,534.89 and the CAC-40 in France to advance 10.65 points, or 0.3%, to 3,619.87.
After Barclays surprise markets with strong earnings, Kraft Foods and retailer Abercrombie and Fitch also reported profits that topped analysts’ expectations.
The upbeat corporate news was a welcome diversion for market attention away from the ongoing worries about Greece’s debt problems.
Fear related to a possible Greek debt default has been the key driver in markets over the last couple of weeks.
That fear lingered on Tuesday, the finance ministers of the eurozone and wider European Union told Greece that it has until 16 March to prove its commitment to reducing its deficit or new budget cuts beyond what is already planned will have to be enacted.
The spread between Greek and German 10-year government bond yields has widened since Monday’s close from around 3.05 percentage points to a high of 3.33% earlier Tuesday before narrowing slightly to 3.24%—the bigger the spread, the greater the markets’ fear.
Despite the modest narrowing during European morning trading, the spread remains on an upward trajectory, suggesting that tensions linger and investors remain sceptical at best that the Greek government can pull off its austerity plan.
Greece has promised to reduce its budget gap from 12.7% of gross domestic product to 8.7% this year as it attempts to dampen down on market fears that it could eventually default on its debt and require a bailout from the 16 countries that use the euro.
Earlier Asian markets ended modestly higher though trading levels were extremely low what with holidays in Shanghai, Hong Kong, Taiwan, Singapore and Malaysia.
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First Published: Tue, Feb 16 2010. 10 20 PM IST