Europe’s stock markets rallied yesterday after Greek lawmakers approved disputed austerity measures that mark a key step to obtaining crucial European Union aid for the debt-laden eurozone member.
In London, the benchmark FTSE 100 index gained 0.91 per cent to close at 5,905.70 points, Frankfurt’s DAX 30 added 0.68 per cent to 6,738.47 points and in Paris the CAC 40 advanced by 0.34 per cent to 3,384.55.
In foreign exchange trading, the European single currency edged higher to $1.3209 from $1.3194 late in New York on Friday.
In midday New York trading the Dow Jones Industrial Average was up by 0.40 per cent, the broad-based S&P 500 gained 0.49 per cent and the Nasdaq Composite was 0.56 per cent higher.
Back in Athens, Greek Prime Minister Lucas Papademos pushed through a package of austerity cuts on Sunday, arguing that the measures were “the country’s only hope” to avoid economic meltdown and secure another bailout.
The Greek capital was rocked by violence, with dozens injured and buildings set ablaze as an estimated 80,000 protesters voiced their opposition.
“Investors bought into stocks on Monday (yesterday) after the Greek Parliament passed the latest austerity measures needed in order for the indebted country to receive a second bailout,” said City Index analyst Joshua Raymond.
Most Asian markets had risen following Sunday’s vote as well. During the Greek debate about 20,000 people also took to the streets to demonstrate in Thessaloniki, the country’s second biggest city.
“Last night, the Greek Parliament passed the package of spending cuts and tax rises agreed with the EU/IMF,” added equities analyst Conall Mac Coille at Davy Stockbrokers in Dublin.
“This means that European finance ministers should on Wednesday (tomorrow) approve new funding for Greece, ahead of the next €14-billionbond redemption on March 20. A formal offer for the new debt swap agreed with private creditors is required by February 17.
“However, both the approval by EU ministers for new funding and the debt swap should now be merely formalities so that the immediate threat of a disorderly default by Greece on March 20 has passed.”
The euro’s rise was tempered, however, by uncertainty over implementing the austerity plan and ongoing talks between Athens and its private creditors.
“At this stage the passing of the vote by the Parliament is now pretty much beside the point,” CMC Markets analyst Michael Hewson said.
“The level of public anger demonstrated in Athens over the weekend suggests that implementation risk is going to be a real problem going forward.
Berenberg Bank senior economist Christian Schulz added: “Whether or not the vote will reduce Greek uncertainties for long is a very open question.”
On Wall Street, Apple shares surged past $500 for the first time, powered by reports a new iPad may be unveiled next month.