ROME: European stocks were surging on Wednesday as investors found reason to be optimistic about the outcome of Greece’s bailout negotiations with creditors that would avoid fallout with the Eurozone.
The Greek government has said it will request a bridge loan of up to six months while it attempts to renegotiate the terms of its existing bailout package. Its newly elected leftist government Syriza wants to wriggle out of certain austerity measures attached to its current agreement, which expires on February 28.
A compromise between Athens and its European creditors would give Greece the cash it needs to keep itself afloat while preventing an imminent exit from the 18-member Eurozone.
Europe’s major indices were all climbing higher Wednesday. The FTSE Eurofirst 300 index leaped 0.8% while the Stoxx Europe 600 rose 0.7% and Germany’s DAX was up 0.4%.
Government bonds also gained, with the Greek 10-year yield falling to 9.99% and Spanish and Italian bonds falling to 1.55% and 1.63%, respectively.
“There is a feeling that a lifeline will be cast out to save the Mediterranean nation,” said IG analyst David Madden. “Europe doesn’t want to let Greece go as it has too much at stake…but at the same time it wants to save face, and this is why markets believe a roundabout rescue package will be reached in the end.”
Meanwhile, U.S. stocks opened lower ahead of Fed minutes that are set to be released at 2 pm in New York and give investors an indication of the timing of rate hikes.
