Greece Hopes to Buoy European Shares
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European stocks were expected to open higher Monday, following positive sessions in the U.S. and Asia, as investors take heart from reports of a rescue package for Greece.
A plan led by Germany and France to bail out the fiscally strapped nation with aid of as much as €30 billion ($40.85 billion) has started taking shape, but the timing and terms of any rescue remain unclear, Greek officials and other people familiar with the matter told the Wall Street Journal.
Greek officials hope to seal a deal by Friday, when Greek Prime Minister George Papandreou meets German Chancellor Angela Merkel in Berlin, but a senior German official insisted that a bailout wasn't imminent, the Journal reported.
"This weekend's news of a prospective Greek bailout plan ... may well go some way to soothe investor concerns about a sovereign default in Europe," said Michael Hewson, market analyst at CMC Markets. However, he noted "there will be onerous strings attached as the Greeks will have to make up to an extra €4 billion worth of cuts in public spending, which could well prove to be the tricky part of the equation, given some of the social unrest seen last week."
Still, with a slew of data due, the week ahead looks set to remain somewhat choppy, said Ben Potter at IG Markets. He noted the possibility that a snap election could be called in the U.K., adding that if that resulted in a hung Parliament, the prospect of uncertainty could take its toll on both London shares and the pound.
Investors will be eyeing economic data due out Monday, including the euro-zone manufacturing PMI and unemployment figures, as well as U.K. mortgage approvals.
Mining shares are also likely to be in focus after copper prices rose in the wake of Chile's earthquake. London Metal Exchange three-months copper reached a high of $7600 per metric ton Monday, its highest level since January 20.
On Wall Street Friday, stocks clung to slender gains in light trading, as a flurry of mixed economic data helped boost the market. The Dow Jones Industrial Average rose 4.23 points, or 0.04%, to 10325.26. The measure gained 2.6% in February—its best month since November 2009—but is still down 1% year-to-date. The Nasdaq Composite gained 4.04, or 0.18%, to 2238.26, while the S&P 500 gained 1.55, or 0.14%, to 1104.49.
In Asia, markets were higher Monday as resource stocks advanced after the massive earthquake in Chile drove copper prices up. Ivestor sentiment was also helped by the general easing in concerns over Greece. However, data from China showing weaker-than-expected manufacturing activity held in check some of the gains.
Japan's Nikkei 225 was up 0.5%, while Hong Kong's Hang Seng Index was 1.9% higher and the Shanghai Composite was 1.1% higher.
In foreign-exchange markets, the positive news on Greece failed to give the euro much support. In recent trading, the euro stood at $1.3592, down from $1.3632 in New York late Friday, while the dollar traded at 89.28 yen, up from 88.97 yen. The pound slipped to $1.5112, down from $1.5236, on continuing election uncertainty.
In commodities, spot gold was trading at $1116.85 per troy ounce, down $1.00 from the New York close. But April Nymex crude oil futures were up 22 cents at $79.88 per barrel. Three-months copper was at $7438, up $243.
Elsewhere, the European government bond markets were lower, with the March bund future down 0.31 at 124.14.
source:online.wsj.com
