Stocks Buoyant as Greece Acts to Dodge Default

By webadmin on 09:39 pm Jun 30, 2011
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London. Global stocks pushed higher once again on Thursday as Greece looked likely to clear the final hurdle required to get bailout cash needed to avert a potential debt default next month.

After Wednesday’s Parliamentary backing for a 28 billion euro ($40 billion) austerity bill, Greece’s lawmakers are poised to vote in favor of an implementation bill later.

Passage of both is necessary for Greece’s international creditors to release the 12 billion euros worth of bailout funds from last year’s financial rescue. Without the money, Greece would have run out of money by the middle of July. A Greek debt default could have caused havoc in financial markets around the world.

In Europe, the FTSE 100 index of leading British shares was up 0.7 percent, while France’s CAC-40 rose 0.8 percent. Germany’s DAX added 0.2 percent.

On Wall Street, the Dow Jones industrial average climbed 0.8 percent, and the broader Standard & Poor’s 500 index rose 0.7 percent.

The Greek Parliament’s backing of the austerity measures helped solidify sentiment in the markets following weeks of unease. “The successful passage of the vote has provided a much needed shot in the arm to risk sentiment which had deteriorated markedly over the last couple of months,” said Lee Hardman, an analyst at the Bank of Tokyo Mitsubishi UFJ.

Many economists believe Greece will ultimately have to default on its debts at some point in the future as the scale of the debt at 340 billion euros is just too big for a country of only 11 million people to service.

For now, investors appeared to be enjoying a respite in their concerns over Greece and the future of the euro currency.

By late morning London time, the euro was trading 0.1 percent higher on the day at $1.4476.

Earlier in Asia, Japan’s Nikkei 225 added 0.2 percent. South Korea’s Kospi rose 0.3 percent and Hong Kong’s Hang Seng jumped 1.5 percent.

In the oil markets, prices dipped modestly after surging the previous on the back of the Greek vote and figures showing stocks in the United States had fallen. Benchmark crude for August delivery was 26 cents lower at $94.51 per barrel in electronic trading on the New York Mercantile Exchange.

Associated Press