European stock markets held onto modest gains yesterday taking in their stride a deal on new austerity measures in Greece as the European Central Bank left its key interest rate at a historic low level.
Dealers said the tone was cautious while eurozone finance ministers reviewed the deal in Brussels with Eurogroup head Jean-Claude Juncker warning many issues needed clearing up before a new rescue for Greece was approved.
At the close, London’s benchmark FTSE 100 index was up 0.33 per cent to 5,895.47 points, Frankfurt’s DAX 30 gained 0.59 per cent to 6,788.80 points and in Paris the CAC 40 added 0.43 per cent to 3,424.41 points.
Elsewhere in Europe, Madrid rose 0.60 per cent but Milan fell 0.90 per cent.
The euro meanwhile drifted upwards to $1.3297, after briefly topping $1.33, after $1.3260 in New York late Wednesday. The dollar rose to 77.45 Japanese yen from 77.03 yen late Wednesday.
In midday New York trade, the Dow Jones Industrial Average was flat while the broad-based S&P 500 dipped 0.08 per cent and the Nasdaq Composite added 0.34 per cent.
“The markets appreciated the (Greek) breakthrough but quickly erased gains since big questions remains,” analyst Alexandre Baradez from Saxo Bank said.
Agreement on new measures demanded by the European Union, the International Monetary Fund and the European Central Bank and on a debt write-down by banks should open the way for the completion of a second Greek rescue package.
But eurozone finance ministers gathered in Brussels warned Greece that they were not yet ready to unlock a new bailout before a close look at the agreement reached in Athens.
German Finance Minister Wolfgang Schaeuble said the meeting was a chance for ministers “to make clear to Greece and the partners in the negotiations what are the conditions for a second agreement with Greece.”
The money is vital to prevent Greece from defaulting on €14.5 billion ($19.2 billion) worth of payments to bond holders, due next month, as the country struggles under a €350-billion debt mountain.
Dealers showed caution early after Greek government coalition parties balked overnight at cutting €650 million in supplementary pensions, and argued until almost the last minute yesterday over finding savings in other areas of the budget.
Earlier in London, the Bank of England also held its rates steady at a record low of 0.5 per cent and said it would inject another £50 billion (€60 billion, $80 billion) into Britain’s struggling economy.
No changes in ECB rates had been expected this week following two recent rate cuts and the unprecedented amounts of liquidity pumped into the banking system to avert a possible credit crunch in the eurozone economy.
Asian markets were mixed yesterday amid Greek woes and as China’s annual inflation rate hit a three-month high of 4.5 per cent in January.
Tokyo lost 0.15 per cent, Shanghai edged up 0.09 per cent and Hong Kong was flat.