London: Europe’s main stock markets rose on Monday after the prospects of an EU-IMF bailout for Greece grew but Portuguese equities plunged amid fears of possible contagion from the Greek debt crisis.
London’s benchmark FTSE 100 index of top shares closed up 0.53% to 5,753.85 points, the Paris CAC 40 jumped 1.17% to 3,997.39 points and the Frankfurt DAX advanced by 1.16% to 6,332.10 points.
Equity investors were generally upbeat after debt-plagued Greece requested a €45-billion (60-billion-dollar) rescue from the European Union and the International Monetary Fund last week to help it avoid a default.
German scepticism over the plan also appeared to ease on Monday, with chancellor Angela Merkel speaking of her “faith” in ongoing talks and saying there was a need for “a quick reaction for the stability of the eurozone.”
Altium Securities analyst Ian Williams argued that stock market players were willing to take more risks amid “signs of progress” over the Greek debt crisis.
“Sentiment swings regarding the progress (or otherwise) of the Greek rescue attempts remain the main driver of global risk appetite,” Williams said.
However, in foreign exchange deals, the European single currency slid against the dollar as traders were unconvinced by the Greek rescue package.
And in the bond market, the yield or rate of return on benchmark Greek government 10-year bonds surged above 9.0% for the first time since Greece joined the eurozone in 2001, indicating fears of a default.
“The Greek debt crisis shows little sign of early resolution,” said VTB Capital economist Neil MacKinnon.
“The financial markets gave a muted response to news late last week that Greece had requested aid from the EU/IMF.
“The risk is that Greece might not be able to avoid eventual debt restructuring. The costs of fiscal adjustment are too high and contagion is spreading to other eurozone economies.”
Greece hopes to get the financial rescue package in place before a 19 May deadline to pay bondholders more than €8 billion.
There was a further boost for the markets after the US government said it would start selling 1.5 billion shares in Citigroup and heavy equipment maker Caterpillar reported it had swung to a profit.
“First quarter earnings season continues to shape up much better than expected,” said Fred Dickson, market strategist at DA Davidson & Co.
“Earnings news appears to be topping the flow of troubling news coming out of Greece and other minor concerns such as the potential impact of financial regulatory reform on Wall Street,” he added.
On Wall Street, the Dow Jones Industrial Average was trading up 0.21 % and the tech-heavy Nasdaq index was down 0.12% in afternoon trading.
Tokyo earlier surged 2.30% and Hong Kong 1.61% following upbeat housing data from the United States issued on Friday.