Markets rise on Greek bailout hopes
Equity investors welcomed a buoyant start to the week on what had been built up to be a make or break day for Greece and potentially the eurozone as we know it. Immediate uplift was provided by mining stocks after the People’s Bank of China cut its banking reserve requirements over the weekend in an effort to spur growth in its slowing economy. The measures have been implemented to increase bank lending at a time when a housing market is slowing and the eurozone debt crisis is weighing on the country’s exports.
As previously alluded to optimism was also building that a new €130 billion Greek bailout would be approved at a group of eurozone finance ministers later in the day, avoiding the disorderly default that would occur on March 20thwhen €14.4 billion of bonds fall due. Despite the optimism, most commentators do not expect the deal to solve Greece’s problems in the longer term, with an economy savaged by recession and growing tension and anti-Europe rhetoric coming from its squeezed population. It did however reduce the near term doomsday scenario hanging over investors; markets reacted accordingly.
The price of oil was hovering around 8 months highs today, Brent crude trading around $120/bbl following escalating Iranian tensions after the world’s fifth largest oil exporter halted sales to British and French companies ahead of EU sanctions in July.
Banks, miners and oil companies were the biggest gainers on the index, among them was Weir Group the industrial engineering company which was the best performer with its 6.6% gain to 2186p. The defensive sectors of Pharmaceuticals and Tobacco were shunned, their constituents populating the bottom end of London’s blue-chip stocks.
The FTSE 100 put on 40 points to 5945, a 0.7% gain on the day to reach levels not seen since July of last year. Proving its recent positive correlation with equity markets, gold traded higher by around 0.6% to $1735/ounce.
This was posted in Bdaily's Members' News section by James .
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