Europe shares rise on Greece

European shares surged and the Greek stock market jumped 8% while the borrowing costs of Italy, Spain, and Portugal — the countries most likely to be hit if Greece heads for the eurozone exit — fell sharply.

US stocks rose with global equities, and bonds from Spain to Italy surged amid optimism that Greece’s debt crisis will end. The euro strengthened against most major peers, while US treasuries dropped with German bunds.

EU officials expressed confidence that a deal with Greece was within reach after Prime Minister Alexis Tsipras’s government submitted a last-minute set of proposals they said could end a five-month standoff over aid. Greek stocks and bonds surged as officials meeting in Brussels yesterday said that progress had been made towards meeting the terms of creditors, including in the contentious areas of pensions and revenue.

While the set of reform measures was delivered too late for a full appraisal by eurozone finance chiefs, unlike prior proposals it wasn’t rejected out of hand and officials said it could form a basis for a deal.

The Standard & Poor’s 500 Index rose 0.6% in New York, poised to close at a one-month high. The Stoxx Europe 600 Index jumped 2.3%, the most since May 8. Yields on 10-year treasury notes rose nine basis points to 2.35%. Greek 10-year rates sank 150 basis points while the nation’s equity index surged. The euro was little changed at $1.1356.

“I’m pretty optimistic about this week with the recent developments in Greece,” said Paul Zemsky of Voya Investment Management, adding that “there were also better existing home sales data, showing the housing market is healthy”.

Reuters, Bloomberg