European shares rise on US data; Greece jitters remain

European shares rise on US data; Greece jitters remain

London: European shares rose on Monday, as upbeat US data boosted hopes of an economic recovery, although doubts persisted on Greece’s ability to implement the tough austerity measures it has agreed to under a $147 billion bailout deal.

The FTSEurofirst 300 index of leading European shares closed 0.2% higher at 1,064.56 points -- after losing 2.7% last week -- its third straight week of declines.

Investor confidence was lifted by data showing growth in US manufacturing, construction and consumer spending, reinforcing the view that an economic recovery is under way in the world’s largest economy.

Among the risers, GDF Suez added 1.9% after it stuck to its earnings goals despite a drop in first-quarter core profit, according to documents released ahead of the utility’s shareholder meeting on Monday.

European finance ministers agreed the record €110 billion ($147 billion) bailout for Greece on Sunday, with Athens set to carry out spending cuts and tax hikes worth €30 billion over three years, on top of belt-tightening measures already taken.

The emergency aid, the most ever for a country, alleviated some fears of a near-term sovereign debt default, but the package still has to obtain parliamentary approvals and left open the question of which fiscally vulnerable country in Europe might be next.

“I have doubts if Greece is ever going to succeed in paying back the money. But having said that, it (the bailout package) is very good for short-term relief and people appear to be quite happy with that outcome," said Heino Ruland, strategist at Ruland Research in Frankfurt.

Banking stocks were mixed, with BNP Paribas, Deutsche Bank and UBS up 0.3 to 1%, while Banco Santander, BBVA and Banco Espirito Santo lost 0.7 to 2.8%.

Greek banks shed 1.3% in choppy trade despite the European Central Bank announcing its acceptance of all Greek government bonds as security for loans, even if their credit rating continues to fall.

Across Europe, Germany’s DAX rose 0.5%, France’s CAC 40 was 0.3% higher. UK markets were closed for a holiday.

Tax pressure

Mining shares were under pressure after the Australian government slapped a 40% tax on mining profits to fund a boost to workers’ income in an election year.

Boliden, Eramet and Aurubis shed 0.1 to 3.3%.

Among other fallers, BP shares in Frankfurt sagged 7.4% after the huge oil slick caused by an underwater leak continued to creep toward the US Gulf Coast, with the Obama government pressing the energy major to stem the oil gushing from its ruptured offshore well.

BP’s chief executive Tony Hayward was quoted as saying on Monday that BP was ready to pay all legitimate claims tied to the oil spill.

On the macroeconomic front, the euro zone’s manufacturing sector continued to power ahead in April, faster than previously thought, as output reached the highest level in almost 10 years, driven by a record performance in Germany, the Markit Eurozone Manufacturing Purchasing Managers’ Index showed.