Monday, 13 July 2015 23:17
NEW YORK: World equity prices climbed on Monday as investors welcomed a conditional agreement to open talks aimed at keeping Greece afloat with a bailout and within the euro zone.
European equities jumped almost 2 percent while Wall Street gained about 1 percent after euro zone leaders made Greece surrender much of its sovereignty to outside supervision in return for agreeing to talks on an 86-billion-euro bailout.
Investors remained anxious that a deal was not entirely in hand and that international lenders, led by Germany, obliged leftist Prime Minister Alexis Tsipras to abandon his promises of ending austerity.
“This is not over yet. In fact it might be far from over,” said Anthony Lawler, a portfolio manager who invests in hedge funds at investment firm GAM in London. “It is not at all certain that the Greek government will accept what is proposed.”
The single European currency dropped more than 1 percent as the Greek debt deal renewed focus on the prospect that the U.S. Federal Reserve might hike interest rates in September.The euro fell 1.2 percent to $ 1.1028, while the dollar gained 0.49 percent to 123.34 yen.
The euro zone’s blue-chip Euro STOXX 50 index hit a two-week high, closing up 1.8 percent, while the pan-European FTSEurofirst 300 index gained 1.9 percent to close at 1,572.05.
MSCI’s all-country world stock index rose 0.86 percent.
“We’re seeing a relief rally,” said Andrew Milligan, global head of strategy at Standard Life Investments in Edinburgh. “As we go through the details, however, it’s very clear that there is a sizeable number of hurdles to jump over, especially in Athens.”
On Wall Street, the Dow Jones industrial average rose 188.37 points, or 1.06 percent, to 17,948.78. The S&P 500 gained 19.04 points, or 0.92 percent, to 2,095.66 and the Nasdaq Composite added 67.36 points, or 1.35 percent, to 5,065.06.
U.S. Treasury yields rose, but soon pared much of their gains, while yields on low-rated government debt in Europe closed the gap on safe-haven German alternatives.
Benchmark U.S. Treasury 10-year notes were last down 2/32 in price to yield 2.4246 percent.
The gap between Italian and German bond yields narrowed to a two-month low of 1.14 percentage points in early trading, but later widened to the 1.23 percent level seen three weeks ago.
Oil prices tumbled as Iran and six world powers appeared to be closing in on a nuclear deal that would end sanctions on the Islamic Republic and allow more Iranian oil on to world markets.
But an Iranian diplomat said a ministerial meeting between Iran and the major powers was unlikely to take place on Monday, leading oil prices to reverse course.
Brent crude for August rose 9 cents to $ 58.82 a barrel. U.S. light crude, also known as West Texas Intermediate (WTI), rose 34 cents at $ 53.08 a barrel.
