European stocks extend gains with Greece deal in sight

GMT 12:10 2015 Tuesday ,23 June

Arab Today, arab today European stocks extend gains with Greece deal in sight

Frankfurt's DAX 30 index gained 1.05%
London - AFP

European stock markets rose further on Tuesday, building on the previous day's sharp rally on hopes of there finally being a deal over Greece's bailout.

Frankfurt's DAX 30 index gained 1.05 percent to 11,581 points in midday trading and the CAC 40 in Paris won 1.23 percent to 5,059.90 points.

Athens' main index surged 4.09 percent to 779.78 points after rocketing 9.0 percent Monday.

Outside the eurozone, London's benchmark FTSE 100 index rose 0.27 percent compared with Monday's close to 6,843.80 points.

Signs of a potential breakthrough in talks between Greece and official creditors sparked a huge rally in European equity markets and a new record in the United States on Monday.

The Frankfurt and Paris markets shot up nearly four percent on Monday, when an eleventh-hour reform plan from Greece that raised confidence a Greek debt default could be averted at the end of the month.

"The prospect of a deal on Greece... following months of tough negotiations is likely to keep the mood in the markets very upbeat this week," Craig Erlam, senior market analyst at Oanda trading group, said on Tuesday.

Greece and its creditors were working Tuesday to seal a bailout deal with exactly one week to go before Athens is due to repay the IMF around 1.5 billion euros ($1.7 billion) on June 30 or face default and a possible exit from the euro and EU.

After an emergency summit in Brussels, the eurozone finance ministers were to hold fresh talks on Wednesday to thrash out the details ahead of a full meeting of all 28 EU leaders on Thursday.

- ECB supports banks -

In foreign exchange, the euro slid to $1.1243 from $1.1340 late in New York on Monday, with profit-taking setting in as the European Central Bank on Tuesday again increased emergency liquidity funds for Greece's banks.

The amount of the new increase of the ECB's Emergency Liquidity Assistance was not specified, but is the fourth one since last Wednesday and came as Greek savers continued withdrawing their money in large volumes from the country's banks.

"While the repayment deadlines to the IMF at the end of this month and to the ECB in July are important milestones that could lead to default, the most pressing issue at the moment is the banking sector," according to Danae Kyriakopoulou, senior economist at the Centre for Economics and Business Research.

"The optimistic scenario is one where deposits gradually return to the banks as consumer confidence is restored. However, we remain cautious on this and see the health of the banking sector as the number one risk for Greece's economy in the short term," she added in a note to clients.

- Upbeat data -

Aside from Greece, traders were tracking data out of China and the eurozone.

"Even as much of the attention is and will remain on Greece for the next few days, positive news out of China where a closely watched HSBC manufacturing index came in above expectations is likely to give stocks a bit of an additional boost today as the worst might be behind the world’s second largest economy," said Markus Huber, senior trader at broker Peregrine & Black.

HSBC's preliminary Purchasing Managers' Index (PMI) came in at 49.6 in June, below the breakeven point of 50 but the highest in three months.

Eurozone business activity rose sharply in June to hit a more than four-year high, which analysts said suggested a better-than-expected recovery in the making despite the Greek crisis.

The closely watched Markit Economics Composite Purchasing Managers Output Index (PMI) came in at 54.1 points in June, up from 53.6 in May, for its best performance since May 2011.

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