FTSE 100: 5350.05 ▲ 83.64 (1.59%)
European markets moved higher on Thursday afternoon on news that Greek politicians have reached a deal allowing them to receive the next €130 billion bailout from the European Union and the International Monetary Fund.
Although no details are available yet, the agreement is expected to see the country implement further strict austerity measures on public expenditure, cut pensions and slash the minimum wage by up to 20%.
European markets rose on the long-awaited news, with the FTSE 100 rising 20 points or 0.33% to 5,896 and the UK's mid-250 index up 0.65%, or 73 points, to 11,235.
See the FTSE’s performance and the index’s top winners and losers.
Germany’s DAX index added 0.59% to 6,789, France's CAC 40 index strengthened 0.43% to 3,425, and the FTSEurofirst 300 index of top European shares increased 0.23% to 1,073.
Greek leaders discussed financial reforms overnight, and had not yet reached a decision when they travelled to Brussels on Thursday morning. However, a compromise on cuts to public pensions was reached to close the deal.
A statement from the Greek prime minister’s office said: ‘The government’s discussions with the troika were concluded successfully this morning on the issue which had remained open for further elaboration. The political leaders have agreed on the result of these discussions.’
Details will be discussed by eurozone finance ministers later today, with talks on the cuts private bondholders will take on their investments.
However, Sony Kapoor, managing director of think-tank Re-Define said: ‘Just because Greek leaders have agreed on targets does not mean that they will or indeed can be delivered.
‘The agreement on cutting minimum wages in Greece would further suck demand out of an already deflating economy. There will be no winners from this Greek deal’
Sterling rose 0.12% against the dollar to $1.583 after the announcement. But the pound slipped 0.15% against the euro to €1.1906.
The European Central Bank (ECB) also opted to keep the status quo and held interest rates at 1%.
Oil and energy stocks rose on the FTSE as the first steps towards a Greek saw oil prices rise higher.
Brent crude for delivery in next month took on 0.31% to $121.29 per barrel and West Texas Intermediate crude for delivery next month rose 0.24% to $106.51.
Oil consultancy and engineering group AMEC (AMEC.L) took on 39p, or 3.6% to £11.10 and Petrofac (PFC.L) added 46p, or 3.1%, to £15.17.
BG Group (BG.L), which is a member of Citywire Top Stocks®, rose 45.5p, or 3.2%, to £14.92 as its fourth-quarter profits soared to $1.5 billion, ahead of expectations of $1.1 billion. The gas company also announced a dividend increase of 10%.
Splenda producer Tate & Lyle (TATE.L) shed 22.5p, or 3.2%, to 673p on debt concerns as it expects margins to be squeezed by higher corn prices and exchange rates.
SVG Capital (SVI.L) leapt up 20p, or 8.4%, to 258p as its net asset value grew by 12.8% in 2011 and it launched a £50 million tender to buy back shares.
Comments (11)
The market seems easily pleased! Who are they kidding? The current agreement is to release a tranche of the €130bn bailout.......so they can afford to pay the €14.5bn repayment instalment due in March! But with the underlying economy still running huge deficits, this just pushes the problem down the road a few months and we'll be in the same place again. The 'austerity measures' (i.e. attempt to balance the budget) are unlikely to work and as the economy shrinks as a result, the problem just gets worse. The only two options remain - as they have always been - to cut loose the Greeks (and any other economies) which need to find a new level against world currencies, or for the German/French/Netherland axis to fund the shortfall.
17:57 on 09 February 2012
This whole performance by the EU is an act.
Greece will default, I say no more cash, and give the money to the banks to insulate them from the default. Greece cannot hold the EU to ransom, this is what happens when you allow tin pot economies into the elite club.
They are only delaying the inevitable. As jeffian has said, just cut the greeks lose.
18:44 on 09 February 2012
I try to be optimistic when looking at the world economy but I have to say I agree with the previous comments.
I have seen enough data about the Greek financial situation to convince me that the bailout/austerity fiasco could go on for many years; perhaps decades. Whether the Greek people or indeed the Greek government like it or not is somewhat irrelevant. It's simply not sustainable.
Despite public perception that the leaders of the EU nations are clueless, I suspect it's not so and behind the scenes they are working out the various scenarios where Greece and it's brethren can be cut free. The only other option is for comlete fiscal unity and I just cannot see the Germans in particular throwing away their advantage in Europe, however that advantage was achieved.
It's somewhat of a paradox. I'm happy that the market is lifting as it means my investments that were savaged in 2011 are now looking a bit healthier but at the same time I'm concerned about the rise. It seems to me that it's all built on sand and so I'm certainly not rushing to put cash back into the markets at the moment.
18:58 on 09 February 2012
Yeah Jeffian and Joe, I agree with you that the current approach to solving Greece's and Europe's problem is absolutely wrong and will not result in the "stated" goals ...... you gotta then ask yourselves the question, why would such "smart" "elite" (Germany, France and Netherlands?) economies even consider going down this route .... are they just such nice guys that they really wanna help those poor "tinpot" economies or has it been a great ride for these economies since the EU got it together ... ie new unsophisticated consumers loaded with new loans to be used to purchase German French and Dutch products and power their economies. In addition, even as we speak, the Germans are issuing bonds at 1 or 2%, and lending to the Greeks and the other "tinpot" economies at 4-7% - business is good for some economies in times of crisis for others .... and oh yes, when the Greeks default the Germans et al will then lay claim to all of Greece (even the Acropolis .. quote Der Spiegel) ..... We have not heard one comment, or seen any attempt to grow these economies and hence ensure they can repay their loans .... so to respond to your "simple" solution .... cutting the Greeks and other "tinpot" economies just does not make good business sense for the "elite" economies .....
19:26 on 09 February 2012
pro tem, boys, pro tem.
France is still very much at risk and Germany doesn't want any pressure on that fragile flower.
19:44 on 09 February 2012
Can't disagree with any of the comments so far, this bailout is not a solution, it is only the tip of a huge iceberg. The bankers are merely playing games trying to extend the Ponzi scheme for one more go around. As usual the bankers skim the cream and leave the average tax paying citizen holding the bag.
While the inevitable DEFAULT may be delayed by this move, it will NOT solve the problem of excess debt, that will require serious REFORM of the present fractional reserve debt creating system of currency creation. It may buy some time for the technocrats to design a better system, but rest assured any revised system will still favour the bankers even though the present one is clearly unsustainable!
19:55 on 09 February 2012
The title of this article should be FTSE climbs as BOE causes monetary inflation with QE
And it's easy to see why: http://www.investopedia.com/video/play/monetary-inflation
20:21 on 09 February 2012
Why are we pouring money into Greece - they have never repaid all their debtors in the last 100-150 years. It's all bonkers?
21:43 on 09 February 2012
julian
The money the ECB is pouring into Greece is going straight out of Greece to pay back the private banks who initially bought the Greek debt. The debt is being transferred from the private banks to the ECB and just laundered through Greece. It is a true case of socialism being used to protect capitalism.
22:32 on 09 February 2012
Jonathon
I agree entirely - maybe if I had said the greeks have been bankrupt for the last 150 years that may have been more acurate.
The whole euro edifice needs dismantling (and I live in a euro country) so that normality can return; sadly the elites who wanted this socialist paradise cannot understand the problem or if they do they couldn't care less about the tax payers who are being forced to bail them out. The only spark on the horizon is that every previous attempt at monetary union in Europe has failed and the last two socialist (Soviet and National Socialists) Unions have disintergrated eventually.
I hope I live long enough to see the demise of both.
09:58 on 10 February 2012
Julian, your comments are inaccurate, dangerous and provocative .... and open up a whole new, wider discussion on who owes what to whom .....
To start with you are 100% correct that Greece (as any other country) has never repaid their debtors .... because the debtors need to repay the Greeks (or any other country) .... I am sure you mean the Greeks have never repaid their creditors ...
If we can safely assume you meant creditors .... well, all businesses, countries, enterprises etc always have creditors on their balancesheets and never fully repay them, there is always, at any point in time, an unpaid element of debt .... so why would that be any different for the Greeks?
If you meant that the Greeks have been bankrupt for 150 years ... it is a gross simplification, and grossly negligent and you need to back it up with a few facts and figures on Greece's 150 year insolvency status .... and it begs the next, more intersting and provocative question ....
Who owes what to whom ..... Without straying too far back in history .... (say 65-70 years ago?) Greece's gold and money reserves were taken, their treasures plundered, and their people massacred .... and never fully (can it ever!!!) be repaid ... Certain non Greek commentators have recently (in the last year or so) gone so far as to say that if Greece fully pursued their rights, the Defendants would even have to sell their "underpants" to make full reparations to the Greeks -
So it seems that, although Greece's current Balace Sheet is woeful, to say the least, ..... perhaps, if certain Off Balance Sheet items were brought into the picture, and realised, a truer picture would emerge, and the Greeks would be treated with at least the level of dignity that they deserve ...
13:09 on 10 February 2012
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