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European shares rise on Greek bailout moves, China growth

European shares rise on Greek bailout moves, China growth
AFP
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First Published: Fri, Apr 16 2010. 12 53 AM IST
Updated: Fri, Apr 16 2010. 12 53 AM IST
London: European stock markets edged higher on Thursday as investors weighed fresh moves in the Greek debt crisis against mixed US economic data and very strong Chinese growth figures, dealers said.
In London, the benchmark FTSE 100 index rose 0.50% to 5,825.01 points, its best showing in 22 months.
In Paris, the CAC 40 added 0.20% to finish at 4,065.65, its highest point this year, while in Frankfurt the DAX edged up 0.21% to 6,291.45 points.
Elsewhere there gains of 0.25% in Milan, 0.74% on the Swiss Market Index and 0.17% in Madrid. Amsterdam fell 0.31% on the day.
Greece said it had invited the International Monetary Fund, the European Union and the European Central Bank to a meeting in Athens on Monday on the terms of last week’s EU-IMF debt contingency accord.
While Greece insisted it was not actually seeking to activate the assistance pact, the market faced up to the prospect of more confusion over whether Athens would or would not seek an early bailout.
But Citi European Economics analyst Giada Giani said the talks were significant as a “formal starting point” for an arrangement under which Greece would receive critical loans in exchange for implementing tough reforms.
“These probably will go well beyond the tightening measures that Greece has put in place up to now, which may help reduce the deficit for 2010 but do little to tackle Greece’s long-term solvency issues,” Gianai said.
Initial market reaction was positive, with the differential, or spread, between Greek 10-year bonds and the benchmark 10-year German Bund narrowing.
At the start of the week, the euro and equities had rallied after eurozone finance ministers unveiled a €30 billion rescue package for Greece on Sunday.
“As the week progressed, pressure kept building and building in the Greek funding crisis,” said analyst Alastair Winter at investment firm Daniel Stewart.
“Amid all the posturing and denials, the Greek government (has) realized that investors (have) given the Brussels ‘fix´ the thumbs down and were demanding ever higher yields of over 7.0%.
“If this carried on, the debt service burden would require further rounds of spending cuts,” he warned.
The three-year financing programme at interest rates of around 5% was aimed at helping debt-ridden Greece and restoring confidence in the single currency.
US data meanwhile was mixed, with an unexpected jump in weekly jobless claims a major concern alongside strong industrial output figures.
Initial jobless claims totaled a seasonally adjusted 484,000 in the week ending 10 April, surprising most analysts who had forecast new claims would fall by 440,000.
News that US manufacturing output increased almost 1% in March provided a boost for industrial stocks.
At the same time, China reported that its booming economy grew 11.9% in the first quarter - good for those looking for Beijing to lead the way out of the woods but worrying for those who fear the government will have to clamp down soon to avoid dangerous overheating.
Dealers said the various news leads made for a conflicting picture on the day, leaving the markets to trade in a narrow, cautious range.
On Wall Street, the blue-chip Dow Jones Industrial Average had slipped 0.06% to 11,116.38 at mid-day while the tech-rich Nasdaq Composite was up 0.31% at 2,512.52.
New claims for US unemployment insurance benefits unexpectedly rose by 24,000 last week, largely due to Easter holiday-related factors, the Labor Department said.
In Asian trade earlier Thursday, Tokyo rose 0.60%, Hong Kong edged up 0.16% while Shanghai was flat, with the Chinese markets tentative after the very strong first growth figures.
Sydney added 0.14%.
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First Published: Fri, Apr 16 2010. 12 53 AM IST
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