World stocks rise on hopes for Greece, US economy

Last Updated: Sat, Feb 18, 2012 19:06 hrs

Stock markets advanced Friday on hopes that Greece would soon get its crucial second bailout and following another batch of upbeat U.S. economic news.

Investors are growing more optimistic that European finance ministers will sign off on the Greek bailout and a bond swap agreement with Greece's private creditors at a meeting Monday.

Despite answering creditors' concerns over its commitment to tough austerity measures, Greece has yet to clinch deals with its international creditors for a bailout worth euro130 billion ($170 billion) and an accompanying euro100 billion ($131 billion) debt writedown with its private bondholders.

Earlier this week, markets had become vexed by worries that Greece could be forced into a disorderly default on a euro14.5 billion ($19 billion) bond repayment due March 20. A deterioration in relations between Greece and its partners in the 17-nation eurozone, particularly with Germany, had prompted speculation that a default may be brewing.

However, sentiment over Greece improved noticeably in the last day as investors bet that Europe will back the bailout, albeit reluctantly.

On Friday, French Finance Minister Francois Fillon told RTL radio the Europeans must honor their commitments now that the Greek Parliament and Greek party leaders have met key conditions.

"We must do absolutely everything so that there is not a default by Greece, that would be dramatic for Greeks themselves and dramatic for Europeans," he said. "The bankers accepted giving up 70 percent of the loans they made to the Greeks, the Europeans must now keep their commitments, that is the position that France is defending."

Optimism over a deal was further buoyed by Steffen Seibert, a spokesman for German Chancellor Angela Merkel, who said Merkel and the leaders of Italy and Greece were "optimistic" that a deal can be agreed. The statement came after Merkel, Italian Prime Minister Mario Monti and Greek Premier Lucas Papademos held a conference call earlier Friday.

"The three leaders are optimistic that the finance ministers can find a solution to the pending questions at the Eurogroup on Monday and thereby contribute to the stabilization of Greece," Seibert said.

Sentiment in the markets has been further buoyed by more positive U.S. economic data, particularly in the jobs market. Figures released Thursday showed jobless claims fell last week by a further 13,000 to 348,000, its lowest level since February 2008.

"Positive U.S. economic data and hopes of a conclusion to the Greek crisis is fueling positive sentiment in risk assets," said Neil MacKinnon, global macro strategist at VTB Capital. "The Greek situation always has the potential for disappointment though as last-minute glitches seem to be part of the process."

In Europe, the FTSE 100 index of leading British shares closed 0.3 percent higher at 5,905.07 while Germany's DAX rose 1.4 percent to 6,848.03. The CAC-40 in France ended 1.4 percent higher at 3,439.62.

The euro was similarly firm, trading 0.2 percent higher at $1.3152.

On Wall Street, the Dow Jones industrial average was up 0.2 percent at 12,928.45 while the broader Standard & Poor's 500 index rose 0.1 percent to 1,358.80.

Earlier in Asia, Tokyo's benchmark Nikkei 225 index jumped 1.6 percent to close at 9,384.17. Seoul's Kospi rose 1.3 percent to end at 2,023.47 and Hong Kong's Hang Seng was up 1 percent to finish at 21,491.62.

Chinese stocks ended flat after spending the day swinging between positive and negative territory. The Shanghai Composite Index was practically unchanged at 2,357.18.

Investors remain skeptical that authorities in Beijing will move more aggressively to prop up slowing economic growth by loosening credit curbs put in place to counter inflation and cool housing costs, Wong said.

Oil prices tracked equities higher — benchmark crude was up 67 cents at $102.98 per barrel in electronic trading on the New York Mercantile Exchange.


Kelvin Chan in Hong Kong contributed to this report.

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