Shares rise on news of Greek progress

US and European shares rose yesterday as European and IMF inspectors said Greece made progress on its bailout programme.

It helped spur equities to build on gains from the previous session’s rally driven by ECB plans to help borrowers under pressure.

But currency and bond investors strayed from this optimism, as the euro fell against several currencies and erased gains against the dollar, and crude oil prices posted modest gains in choppy trading.

The euro and stock markets had enjoyed a strong finish to last week after robust US jobs data on Friday eased concerns about global growth.

Compounding investor optimism were comments by ECB president Mario Draghi last week on plans for a new wave of bond purchases aimed at helping to calm the eurozone’s turmoil.

“There is a definite dichotomy in investor sentiment at the moment. There has been a good bit of interest from shorter- term traders to fade the recent bout of euro strength given the lack of action and follow-through from Draghi last week,” Andrew Cox, currency strategist at CitiFX in New York, said.

In Athens, inspectors from the troika concluded a visit to Greece, saying they would return in September with a verdict.

They said Greece has made progress in finding budget cuts needed to continue its debt bailout programme but cautioned not all work is done.

“It’s follow-through with a little bit of relief that Draghi’s remarks point to at least a work-around for Europe,” Fred Dickson, chief market strategist at DA Davidson & Co in Oregon said.

“People are more encouraged the economic slowdown in the US may have reached a plateau,” he added, regarding Friday’s payrolls report.

Still, bond and foreign exchange markets were cautious. Germany has yet to approve Europe’s new rescue fund and Spain’s 10-year bond yields remain dangerously high. The euro eased against most currencies after earlier hitting a one-month high against the dollar.

The MSCI World Index was up 0.7% to its highest level since early May. In another sign of the wait- and-see mood, oil prices in New York were up 31c to $91.71 a barrel in choppy trade, with buyers caught between eurozone hopes and still struggling growth in many large economies.

After the gains of the past week, European equities continued to rise yesterday, touching a new four month high. The pan- European FTSEurofirst 300 was up 0.6%.

The euro was flat against the dollar at $1.2385, below a peak of $1.2443 hit in Asian trade, its strongest since Jul 5.

The ECB continued to keep a lid on its bond purchase programme last week. It has barely used the Securities Markets Programme this year and has not bought any bonds for 21 weeks despite a severe intensification of the eurozone debt crisis.


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