Stock markets up on Greek bailout hopes

http://www.theguardian.com/business/2015/feb/18/stock-markets-soar-on-greek-bailout-hopes

Version 0 of 1.

The UK stock market hit a 15-year high, buoyed by hopes that Greece will reach a breakthrough with its creditors.

A Greek government spokesman said Athens would request an extension of its bailout on Thursday, which expires in 10 days. This will fuel speculation over whether Jeroen Dijsselbloem will call another emergency Eurogroup meeting on Friday to consider the plan.

Athens may not request an extension of all its bailout conditions but appears to be looking to revive the compromise plan pulled together on Monday by the European commissioner Pierre Moscovici.

In early trading, the FTSE 100 index rose above 6,920, nearing its all-time closing high of 6,930.20 and its intraday high of 6,950, which were hit on 30 December 1999. It later slipped 3 points 6,895, when it emerged that the loan request from Athens had been delayed until Thursday morning.

Greek shares rose as much as 3% on Wednesday, while the Italian and Spanish stock markets climbed 0.9% and 0.7% respectively. In Asia, Japan’s Nikkei hit a seven-year high, closing up 1.2%, or 212 points, at 18,199.17. US shares hit all-time highs last night. The Standard and Poor’s 500 closed up 0.2% at 2100, beating its record from Friday.

Michael Hewson, chief market analyst at CMC Markets UK, said: “While the two sides are talking the European Central Bank is unlikely to hit the off switch on the ELA [emergency liquidity assistance] facility, which comes up for review today. While there is some concern that the ECB might suddenly turn off the taps they are unlikely to do so, unless given the wink by politicians from Brussels.

“ECB president Mario Draghi is unlikely to want to go down in history as the man who pulled the plug on Greece and undermine the ’irreversible’ nature of the euro.”

Other factors underpinning the rise in stock markets include a recovery in oil prices from five-year lows. Brent crude, which slumped from a peak of $115 a barrel last summer to less than $47, has recovered to about $62. The FTSE 100 is dominated by commodity companies.

The ECB finally turned on the money taps to boost economic growth at the end of January, boosting share prices. Traders have become more optimistic about the pace of the global recovery. The recent spate of economic data has been encouraging, even in the eurozone, which grew by 0.3% in the last quarter. At the same time, a US rate rise does not appear to be imminent.