Markets rally on bullish talk by G20 ministers

INTERNATIONAL stock markets rallied in afternoon trading on the back of bullish talk from G20 finance ministers, and despite further talk of a Greek default — from the country’s own finance minister.

Evangelos Venizelos reportedly said (although he later denied it) that an orderly default — with a 50% haircut for bondholders — was one of three possible solutions to Greece’s economic woes.

The Greek finance minister’s musings were given added strength by Klaas Knot of the European Central Bank (ECB), who said that a default by the country couldn’t be ruled out.

However, a speech by the EU Commissioner for Economic and Monetary Affairs Olli Rehn, stating that everything would be done to avoid a controlled default by Greece — and a vow from the G20 meeting of finance ministers to make “a strong and co-ordinated international response” to the challenges facing the global economy, calmed investors somewhat.

The ISEQ — which has seen €3 billion wiped off the combined value of Irish stocks this week — finished a bad week on an upward trajectory; rising by just over 1.6% on Thursday’s close.

Losses for the likes of Elan, Aryzta and Providence Resources were offset by good gains for CRH, DCC (which announced another significant acquisition in its energy division), Glanbia, FBD and Tullow Oil.

Meanwhile in London, the FTSE clawed backearlier losses by finishing the day up half a percent.

There were similar-sized gains in Frankfurt and on the Eurostoxx 50.

The CAC-40 in Paris showed a slightly healthier rise of just over 1%. Spain’s IBEX showed the best daily performance of any European exchange, however, with a 2.12% increase.

Market jitters are set to continue for the foreseeable future, however, until more solid proof comes that the eurozone’s heavy- hitters are fully focused on saving the region.

“To contain the damage, Germany needs to forcefully dispel any doubts about its commitment to the common currency,” German private bank Berenberg said in a research note yesterday

“The ECB needs to clarify it will continue to act as the backstop of last resort against dangerous waves of financial turmoil.”

Early trading in the US yesterday saw marginal gains on the main Wall Street exchanges, but there was further bloodshed in Asia, where Tokyo and Hong Kong closed the week with further falls of 2.07% and 1.36% respectively.

Asia yesterday saw officials from China and Japan — the world’s second and third-largest economies — say any support for Europe would be limited and that the eurozone will have to solve its own debt crisis.