Greece aid lifts euro, stocks hit 18-month high
Tuesday, 13 April 2010
LONDON, Apr 12 (Reuters): An EU-IMF rescue package for Greece helped calm market jitters Monday and boosted the appeal of risky assets, with world stocks hitting 18-month highs and the euro rising to its highest in nearly a month.
Greece's borrowing costs eased to their lowest levels in a week while other riskier assets like commodities were also in demand. Yields on "safe haven" German Bunds and US Treasuries rose.
Euro zone finance ministers approved a 30-billion-euro ($40 billion) emergency aid mechanism for debt-plagued Greece Sunday but said Athens had not requested it be activated yet.
Together with at least 10 billion euros expected from the International Monetary Fund in the first year, it could add up to the biggest multilateral financial rescue ever attempted.
Greece's share benchmark surged 4.9 per cent, while the pan-European FTSEurofirst 300 gained 0.2 per cent, helped by stronger bank shares.
Swiss bank UBS was among the top gainers in Europe, up 2.9 per cent after it delivered its highest pre-tax profit since the start of the credit crisis and said withdrawals were substantially lower at all divisions.
Global equities measured by the MSCI All-Country World Index advanced 0.4 per cent to 315.20 points, after hitting a 18-month high of 315.59.
Earlier, Asian shares outside Japan hit 22-month highs and Tokyo's Nikkei average rose 0.4 per cent.
"The package is big enough and the term seems reasonable. For the market it means Greece will never have to panic sell and the market can't force Greece into a corner and that changes complexion of Greek bets and the euro in the short term at least," said Daragh Maher, deputy head of global foreign exchange research at Calyon.
"It's generally positive for risk because you've taken out one of the big banana skins in terms of macroeconomic risk. (But) Greece still face difficulties and other euro zone countries face difficulties. It's hard to create medium-term bullish story for the euro."
Greece's borrowing costs eased to their lowest levels in a week while other riskier assets like commodities were also in demand. Yields on "safe haven" German Bunds and US Treasuries rose.
Euro zone finance ministers approved a 30-billion-euro ($40 billion) emergency aid mechanism for debt-plagued Greece Sunday but said Athens had not requested it be activated yet.
Together with at least 10 billion euros expected from the International Monetary Fund in the first year, it could add up to the biggest multilateral financial rescue ever attempted.
Greece's share benchmark surged 4.9 per cent, while the pan-European FTSEurofirst 300 gained 0.2 per cent, helped by stronger bank shares.
Swiss bank UBS was among the top gainers in Europe, up 2.9 per cent after it delivered its highest pre-tax profit since the start of the credit crisis and said withdrawals were substantially lower at all divisions.
Global equities measured by the MSCI All-Country World Index advanced 0.4 per cent to 315.20 points, after hitting a 18-month high of 315.59.
Earlier, Asian shares outside Japan hit 22-month highs and Tokyo's Nikkei average rose 0.4 per cent.
"The package is big enough and the term seems reasonable. For the market it means Greece will never have to panic sell and the market can't force Greece into a corner and that changes complexion of Greek bets and the euro in the short term at least," said Daragh Maher, deputy head of global foreign exchange research at Calyon.
"It's generally positive for risk because you've taken out one of the big banana skins in terms of macroeconomic risk. (But) Greece still face difficulties and other euro zone countries face difficulties. It's hard to create medium-term bullish story for the euro."