Wednesday, 15 July 2015 21:46
LONDON: European stock markets and the euro rose Wednesday as Greece’s parliament prepared for a key vote on its new bailout deal.
London’s benchmark FTSE 100 index climbed 0.11 percent to 6,761.51 points in mid-afternoon deals, as traders also reacted to Chinese economic data and news from the US about a probable interest rate hike in 2015.
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Frankfurt’s DAX 30 gained 0.26 percent to 11,547.23 points and the CAC 40 in Paris won 0.24 percent to stand at 5,043.88 compared with Tuesday’s close.
In foreign exchange, the euro increased to $ 1.0969 from $ 1.1008 late on Tuesday in New York.
Traders in Europe were mostly concerned with Greece’s parliamentary vote later Wednesday on tough reforms demanded by eurozone creditors in exchange for a huge new bailout, in what could be Prime Minister Alexis Tsipras’s most difficult political test yet.
“Clearly, the most important thing today is the Greek vote on the bailout plan and the passing of the proposed reforms needed to secure bridging loans that will enable the country to avoid default,” said Craig Erlam, senior market analyst Oanda trading group.
The vote comes hours after the International Monetary Fund (IMF) issued a stark warning that Greece would need far more debt relief to stop it crashing out of the common currency than European governments have so far been willing to contemplate.
The last-ditch deal struck Monday saw Tsipras agree to sweeping changes to labour laws, pensions, VAT and other taxes — many of which had been rejected by voters in a public referendum — in exchange for new funds to keep Greece’s struggling economy afloat.
The parliament in Athens must approve the deal before the 18 other eurozone leaders start negotiations over what Greece is to get in return: a three-year bailout worth up to 86 billion euros ($ 95 billion), its third rescue programme in five years.
“This really is a hugely important but difficult vote that is effectively a choice between three more years of painful austerity or a potentially brutal and messy Greek exit from the eurozone,” said Erlam.
Europe’s leading stock markets had risen the previous two days after the Greek deal had been reached in the early hours of Monday.
US stocks opened higher Wednesday following confirmation from Federal Reserve Chair Janet Yellen that an interest rate hike was still expected in 2015.
Five minutes into trade, the Dow Jones Industrial Average was up 0.05 percent at 18,062.53 points.
The broad-based S&P 500 rose 0.10 percent to 2,111.03 points, while the tech-rich Nasdaq Composite Index gained 0.24 percent at 5,116.96.
Yellen said the Fed still planned to raise rates in 2015 due to the improving economy, though she warned that continued turbulence from Greece and China poses risks to the US growth picture.
Asian stock markets mostly advanced Wednesday after data showed China’s economy grew more than expected in the second quarter, although Shanghai and Hong Kong sank on fears the news will likely put off any fresh growth-boosting measures.
