You are here

Europe: Stocks gain ground after Athens bailout vote


[LONDON] Europe's main stock markets advanced on Thursday after Greek lawmakers voted in favour of an austerity-laden bailout package and the European Central Bank increased emergency funding to Greece's teetering banks.

London's benchmark FTSE 100 index of top companies gained 0.63 per cent to 6,796.45 points.

In the eurozone, the CAC 40 in Paris climbed 1.47 per cent to 5,121.50 points and Frankfurt's DAX 30 rose 1.53 per cent to 11,716.76 points against Wednesday's close.

The Greek parliament backed a deeply contentious bailout package earlier Thursday, clearing the first hurdle towards securing rescue funding hours before the Eurogroup of eurozone finance ministers resumed talks and agreed to launch talks for a third Greek bailout.

Prime Minister Alexis Tsipras managed to push through a series of unpopular reforms demanded by the country's international creditors despite opposition by some members of his hard left Syriza party, while on the streets of Athens anti-austerity protests turned angry as demonstrators threw firebombs at police.

"The Greek parliament put the ball back in the court of its creditors... by voting through last weekend's deal amidst a mini-Syriza rebellion and riots in Athens," said analyst Connor Campbell at trading firm Spreadex.

In foreign exchange deals, the euro dipped to US$1.0887 from US$1.0947 late on Wednesday in New York, as the dollar strengthened after Federal Reserve chief Janet Yellen reaffirmed a US interest rate hike by year-end.

"The dollar index rallied to a six week high as Fed chair Janet Yellen once again reaffirmed the central banks outlook for a 2015 rates rise... (and) signalled at improving economic confidence and a buoyant labour market for the decision to prime markets for an increase in US interest rates over the coming months," said Kash Kamal, senior research analyst with Sucden Financial Research.


During a regular policy meeting Thursday, the ECB governing council decided to increase its Emergency Liquidity Assistance (ELA) funding to keep Greek banks afloat, following the conclusion of a vital reforms-for-bailout deal that was concluded Monday.

The ECB - which has repeatedly increased maximum ELA funds as the Greek crisis hardened - said it would add another 900 million euros (S$1.34 billion) above the total reserve that had been limited to 89 billion euros since June 27.

"The ECB has become a key player in the Greek saga due to the country's banks dependency on emergency liquidity assistance. Greece is a very sensitive topic, especially for the ECB which is meant to be independent of political influence," said Craig Erlam, senior market analyst with the Oanda trading group.

But Mr Draghi delivered "a reassuring message" at the ECB press conference Thursday, said Berenberg analyst Holger Schmieding.

"The eurozone is coping with the Greek noise. Chances are that even Greece can get back on track if it implements the envisaged bailout deal," he said.

US stocks powered higher Thursday underpinned by solid earnings in the banking and technology sectors.

Around mid-day in New York, the Dow Jones Industrial Average rose 0.21 per cent to 18,088.79 points.

The broad-based S&P 500 gained 0.67 per cent to 2,121,57 points, while the tech-rich Nasdaq Composite jumped 1.05 per cent to 5,152.72.

Leading the way were Netflix shares, up 11.0 per cent, and Citigroup, 2.7 per cent, after both beat expectations for second-quarter results.

EBay surged 4.0 per cent as it beat expectations on sales and earnings and confirmed the split off on Friday of subsidiary PayPal.

Asian equities also crept up Thursday on investor optimism over Greece.

Tokyo gained 0.67 per cent, Seoul added 0.72 per cent and Sydney gained 0.59 per cent.

Shanghai ended 0.46 per cent higher and Hong Kong closed up 0.43 per cent, having both opened sharply lower at the start of the session.

Volatility returned to Shanghai and Hong Kong as better-than-expected Chinese economic growth data reduced the chances of fresh economy-boosting measures from Beijing, while there were fears a recent rout in mainland markets could resume.

Read more on the Greek crisis here