London: European share prices rose early on Monday after Greece’s Parliament approved the deeply unpopular austerity bill needed to secure the next EU/IMF rescue package.
The European banking shares index gained 1.1%, led by National Bank of Greece, up 10.1%, with banks in the euro zone periphery among top gainers.
They helped the FTSEurofirst 300 index of top European shares rise 0.6% to 1,069.89 points at 03:45 pm, regaining most of the ground lost on Friday, after Greece’s international lenders demanded more steps from Athens in return for the new financial aid it urgently requires to avoid defaulting on debts falling due next month.
The index remained stuck in last week’s trading range of between 1,061.35 and 1,079.97 after hitting a six-month closing high on 3 February after a rally fuelled by strong economic data, particularly from the United States, and a European Central Bank move to boost banking liquidity.
Gains were kept in check as Greece must still find a further €325 million ($428.6 million) of spending cuts and give binding assurances the plan will be implemented before Wednesday, when euro zone finance ministers meet to decide on a new €130 billion bailout package for the country.
Investors were also awaiting economic data from the euro zone’s power house Germany later this week before committing money to the recent rally, which saw the FTSEurofirst 300 gain around 12% in the seven weeks between 23 December and 3 February.
“People were losing patience with Greece. In the end they got their act together and it’s definitely a positive,” Markus Huber, head of German sales trading at ETX Capital, said.
“The market went up so much since the beginning of the year that some kind of consolidation will be normal; what we need now to push the market higher is more strong economic data.”
Waiting for a call
Among Monday’s top gainers was British telecom company Cable & Wireless Worldwide, which soared 28% on news that Vodafone is considering making an offer for the group.
Meanwhile France Telecom rose 1% after reaching a preliminary accord to buy out most of Egyptian tycoon Naguib Sawiris’s stake in their jointly owned telecom operator Mobinil.
Coming days after commodity trader Glencore’s proposed $41 billion takeover bid for mining group Xstrata, investors said there were hopes these moves heralded more takeover activity to come.
“There are definitely a lot of corporates in a position to do more with their cash,” said Alastair McLeod, who manages a 20 million pounds equity fund for Rivercrest Capital.
“Instead of just doing share buybacks or restructuring their debt, you might actually see them spend some money, whether it’s M&A or whether it’s trying to do some more constructive investments.”