The euro rose against the dollar and global equity markets edged higher yesterday after a Greek government official said eurozone ministers and Greece agreed on a draft accord that could extend a loan agreement to help Greece avoid bankruptcy.
However, officials stressed that there was as yet no formal agreement in the full meeting of the Eurogroup of 19 finance ministers.
“A lot of people are sensing you might get the news over the weekend, so you have a lot of caution going into today,” said Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York.
Earlier, Germany’s DAX index hit a new record intra-day high before paring gains and Britain’s top share index closed up within 0.5 per cent of a 15-year high. Europe’s leading index closed at fresh seven-year highs, while the US benchmark S&P 500 index traded just below record highs.
Greece’s leftist prime minister said he was certain eurozone finance ministers would accept Athens’ request for an extended loan, but Germany demanded “significant improvements” in Greek reform commitments.
A report by German magazine Der Spiegel that the European Central Bank was making contingency plans for a possible Greek exit from the currency area if the talks fail, on which the ECB declined comment, highlighted the high stakes.
The euro pared losses against the US dollar to trade up 0.3 per cent at $1.1400. Against the yen, the dollar pared losses to trade 0.23 per cent lower at 118.67.
MSCI’s all-country world equity index traded flat, up 0.12 per cent, while the European FTSEurofirst 300 index of top regional shares closed up 0.33 per cent at 1,525.21.
On Wall Street, the Dow Jones industrial average rose 39.64 points, or 0.22 per cent, to 18,025.41. The S&P 500 gained 1.4 points, or 0.07 per cent, to 2,098.85 and the Nasdaq Composite added 8.26 points, or 0.17 per cent, to 4,932.96.
Greek bond yields pushed lower on hopes eurozone finance ministers will eventually reach a deal on a loan agreement.
Greek three-year yields dropped 63 basis points to 16.497 per cent, pulling further away from last week’s highs above 22 per cent.
The Greek stalemate over-shadowed data pointing to growth in Germany and France, which helped push European shares higher.
Half way into the European earnings season, results have been strong. Fourth-quarter earnings are expected to grow 19.5 per cent, which would be the best quarter in three-and-a-half years.
The FTSEurofirst 300 has risen 11 per cent so far this year, outpacing a 1.9 per cent gain in S&P 500, helped by the ECB’s plans to buy government bonds to boost the economy.