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Stock markets rise on Greece optimism

Markets cheered by hopes Greece will commit to spending cuts

Stock markets around the world are up, cheered by reports quoting Greek government officials as saying party leaders would pledge their support for deep spending cuts and other reforms by Wednesday. But gains are limited, with a good dose of scepticism that Greece can avoid a default at this stage.

Markets have also taken comfort from Chinese comments about helping the euro, although they were short on detail.

Louise Cooper, markets analyst at BGC Partners, said:

Markets have shrugged off the news out last night that today’s eurozone finance ministers meeting has been cancelled and replaced by a conference call. The sticking point seems to be the Troika’s desire for the Greek political class to sign a “statement of support” promising that any newly elected government will stick to its programme.

Given that the current most popular party leader, Samaras, has repeatedly said – most recently on Sunday – that he would renegotiate the terms of the bailout if he got to power, this is probably a wise move by the paymasters. But from the Greek perspective is it not best to promise anything just to get the money? Isn’t it better to default once you have the cash rather than before? And once the money is in the bank, win an election by promising the Greek electorate that less will be paid back (in one way or another). That is bound to be a popular and winning political strategy.

The FTSE 100 in London gained 0.2%, or 14 points, to 5914 while Germany’s Dax added just under 1% to 6792 and France’s CAC 40 rose 0.7% to 3400. Futures indicate that Wall Street will open higher.

Asia saw more dramatic moves after the Bank of Japan announced a further loosening of monetary policy through increased purchases of government bonds, raising hopes the yen’s strength could wane, helping exporters.

The Nikkei in Tokyo jumped 2.3% to close at 9,260.34, its highest close since August. Hong Kong’s Hang Seng jumped 2.1% to 21,365.23, its highest finish since August and South Korea’s Kospi gained 1.1% to 2,025.32.

UK banks were among the biggest risers on the FTSE, with Royal Bank of Scotland leading the pack with a 2.8% gain to 27.4p. HSBC was up 2.4% at 575.2p and Barclays advanced 2.1% to 240p.

Pharmaceuticals AstraZeneca and GlaxoSmithKline were among the biggest fallers, joined by oil stocks BP and Royal Dutch Shell as well as ITV and Unilever.

AstraZeneca dropped 3.3% to £29.18 while BP lost 2.3% to 483.6p and GSK shed 1.3% to £14.21. ITV was down 1.3% at 77.5p, Unilever fell 0.9% to £20.62 and Shell declined 0.7% to £23.16. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds