London: Global equities rose Friday after heavy losses earlier this week, and the euro pulled further away from recent lows as crisis-hit Greece appeared to edge closer to a bailout, dealers said. The London stock market gained 0.25%, Frankfurt added 0.78% and Paris won 0.26 in late morning European trade.
All three main markets had rallied Thursday on news that a Greek debt bailout was near, with sentiment also lifted by positive company results.
“Expectations of an announcement about a joint EU-IMF bailout of Greece within days have helped soothe investor anxiety about an imminent Greek default,” said CMC Markets analyst Michael Hewson.
“And (this) has seen the euro continuing to pull away from this week’s 12-month lows,” he added.
The euro jumped as high as $1.3307, up from $1.3244 in New York late Thursday, and after striking a one-year low of 1.3115 on Wednesday.
As pressure eased, Greek bond yields, indicating the price the government would have to pay to raise new money on financial markets, were stable.
The rate on 10-year paper came to 9.052% against 9.039% on Thursday. The yield on Wednesday soared to a record 11.142%.
Asian stocks rallied at the end of a tough week, with sentiment boosted by hopes that a Greek bailout is in sight. Tokyo bounced 1.21% higher and Hong Kong won 1.59% in value.
Greece, the European Union and the International Monetary Fund are “very close” to agreeing austerity measures needed to secure badly-needed loans, and a deal will be announced by Sunday, a Greek government source told AFP.
Fears over debt-laden Greece and the fiscal health of the eurozone have hammered global financial markets this week.
Markets were rocked on Tuesday after Standard & Poor’s slashed Greek debt ratings to junk status.
They took another heavy knock from rating downgrades to Portugal and Spain that sparked fears of contagion from the crisis in Athens.
“Reports suggest that some form of agreement has been reached in the negotiations on the Greek rescue package, involving additional budget cuts for €24 billion, or 10% of Greek GDP, spread over the next three years,” said Citi analyst Giada Giani in a note on Friday.
“However, doubts remain about the ability of the Greek government — already facing strong opposition from trade unions — to implement such draconian measures over such a short period of time.”
Social tensions mounted in Greece on Friday as the embattled government negotiated over the huge cuts in spending needed to save the country from a debt default.
Aside from Greece, traders were on tenterhooks before publication of US gross domestic product growth figures for the first three months of 2010.
“On the economic data front, US GDP numbers will be the highlight of the day and they are due to confirm that the US economy has returned to decent health,” said Capital Spreads analyst Simon Denham.
Wall Street had rallied on Thursday, with the Dow Jones Industrial Average soaring 1.10% as fears over the eurozone debt crisis ebbed and traders clawed back losses from earlier in the week.
Next week, financial markets in Tokyo will be closed from Monday to Wednesday due to national holidays.
London will be shut on Monday for a public holiday, before Britons head to the polls in a general election on 6 May.
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