European stocks steady

European stock markets closed higher yesterday after massive losses the previous day as investors waited for key meetings between EU and Greek leaders on Athens’ shock plan to put its latest debt rescue to a referendum.

The referendum announcement late on Monday plunged the markets into turmoil, with some bourses posting losses of five per cent or more on fears a ‘No’ vote would leave the EU back at square one on how to solve its debt crisis.

Investors were also on alert over rising pressure on Italy and ahead of the US Federal Reserve’s latest monetary policy announcements while G20 leaders began gathering for a summit meeting now hijacked by the Greek referendum move.

German Chancellor Angela Merkel and French President Nicolas Sarkozy summoned Greek Prime Minister George Papandreou for talks yesterday after his referendum plan raised the spectre of Greece’s exit from the euro.

Markets steadied as traders hoped for “a positive outcome from the meeting,” Spreadex trader Simon Furlong said.

Sharp early gains on Wall Street helped the European markets as US investors anticipated more Fed help for the economy.

In London, the FTSE-100 index of top companies closed up 1.15 per cent at 5,484.10 points. In Paris, the CAC-40 gained 1.38 per cent to 3,110.59 points and in Frankfurt the DAX 30 rose 2.25 per cent to 5,965.63 points.

Other European markets made similar gains, with Milan up 2.31 per cent but Madrid finished marginally lower, down 0.06 per cent.