Europe open: Markets rise on relief, but Spain still on radar

Date: Monday 18 Jun 2012

-Markets looking out to possible report on Spanish banks
-Investors looking to Eurogroup meeting at end of week
-G-20 may announce new IMF loans
-US and EU to decide whether to pursue new trade agreement

FTSE-100: 1.22%
Dax-30: 1.21%
Cac-40: 1.18%
Stoxx 600: 0.99%
FTSE-Mibtel: 0.65%
Ibex 35: 0.59%

Europe´s main equity benchmarks have begun today´s session with moderate gains in a sign of relief following the latest election results in Greece, which have exorcized the most short-termist of fears regarding a possible euro exit by Greece.

When looking out to the medium-term, however, some investors remain quite skeptical regarding the country´s future; particularly with respect to its prospects for remaining within the single currency.

Be that as it may, investors are already looking out to this next Thursday. From that date onwards markets may learn the results of the private audit of Spain´s financial system. Following that financial markets will begin to ask authorities for greater details regarding any emergency funds for Spanish banks.

Acting as a backdrop, the G-20 leaders assembled in Mexico are said to be prepared to announce new funding for the International Monetary Fund (IMF) and, possibly, new economic stimulus measures.

At least as important as the above, Bloomberg is commenting this morning on how, before the end of the month, US and European Union trade officials will recommend whether to pursue a free-trade agreement. That would constitute a very welcome (and free) boost to economic growth world-wide, but especially on both sides of the Atlantic.

Back on the subject of Greece, a coalition government is expected to be announced in the next few days, if not sooner. Nonetheless, it remains to be seen who will occupy the post of Prime Minister.

After that is resolved Greece is expected to return to the negotiating table with its international creditors in a bid to soften the terms of its aid package.

Lastly, towards the end of the week focus may begin to shift to the Eurogroup meeting that will lay the groundwork for the following week´s European summit.

From a sector stand-point the best performers now are: automobiles (1.73%), basic resources (1.6%) and construction stocks (1.5%).

Oil and euro rise slightly

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