New optimism about a fresh Greek bailout package is lifting the mood of investors around the world, with Wall Street opening over 1% higher.
The Dow Jones in New York climbed over 130 points to 12574.29 in early trading while the FTSE 100 index in London rose some 66 points at 6002.40, a gain of more than 1%. Stock markets in Europe were also up, with Germany's Dax trading nearly 150 points higher at 7308.67, a rise of 2.07%, and France's Cac adding nearly 72 points to 4014.14, up 1.82%.
The euro hit a three-week high against the dollar and Greek bond yields edged lower after a report that Germany is relenting over its demands for an early rescheduling of Greed debt, raising hopes that a second aid package can be put together by the end of next month. That date is crucial because the International Monetary Fund has threatened to withhold a tranche of aid due on 29 June unless the EU guarantees to meet Athens' funding needs for the next year. Greece has realised that it will be unable to return to capital markets to service its borrowing needs any time soon.
Amid the risers in London were UK banks such as Standard Chartered and Barclays, which benefited from a broker note. Nomura remained "overweight" on all three branches of financials - banks, insurance and real estate - but expressed a preference for banks. Standard Chartered was upgraded to "buy," which sent its shares 27.5p higher to 1632.5p.
"With bank debt performing well and earnings downgrades perhaps now reaching at least a relative crescendo, the sector's underperformance [against insurance and real estate] may be close to an end," said Nomura.
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