European shares up after Greek rescue request

European shares up after Greek rescue request

London: European stock markets rose on Monday following gains elsewhere, winning more ground after crisis-hit Greece requested EU-IMF rescue aid last week.

In late morning trade, London’s benchmark FTSE 100 index of top shares added 0.71% to 5,764.31 points.

Frankfurt’s DAX 30 won 0.79% to 6,310.95 points and the Paris CAC 40 gained 1.09% to 3,994.77.

The Stoxx 50 index of leading eurozone shares increased by 0.83% to 2,943.95 points.

Equity investors were upbeat after debt-plagued Greece requested a €45 billion ($60 billion) rescue from the European Union (EU) and the International Monetary Fund (IMF) last week to help it avoid a default.

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 in a note to clients.

“For now the risk trade appears to be back on again following some signs of progress over the weekend."

However, in foreign exchange deals, the euro slid against the dollar as traders were unconvinced by the Greek rescue package.

And in the bond market on Monday, 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.

“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."

He added: “Greek bond yields continue to rise and the spread against bonds reached a new record on Monday morning.

“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 package in place before a 19 May deadline to pay bondholders more than €8 billion, which if it misses could prove a crippling default.

Investors meanwhile welcomed housing data out of the United States, which boosted confidence that a recovery in the world’s biggest economy was on track.

Washington on Friday released estimates showing sales of newly constructed single-family homes jumped nearly 27% month on month in March, the biggest surge in 50 years, a dealer said.

The figure was also up nearly 24% from March 2009, according to the Census Bureau and the Department of Housing and Urban Development data.

The news lifted Wall Street before the weekend, which in turn gave impetus to Asian markets on Monday, with Tokyo surging 2.30% and Hong Kong soaring 1.61%.