Europe close: Greece's fresh reform proposals lift stocks
European stocks racked up healthy gains on Friday, along with the euro, while safe-haven German Bunds lost their appeal, as Greece’s fresh reform proposals to its Eurozone creditors underpinned hopes of a debt deal.
Aer Lingus Group
€2.53
16:34 16/09/15
Food Producers & Processors
8,016.55
15:44 26/04/24
FTSE 100
8,138.71
15:45 26/04/24
FTSE 250
19,820.29
15:45 26/04/24
FTSE 350
4,469.44
15:45 26/04/24
FTSE All-Share
4,422.82
15:45 26/04/24
Hammerson
27.08p
15:44 26/04/24
InterContinental Hotels Group
8,054.00p
15:45 26/04/24
Oil Equipment, Services & Distribution
4,928.34
16:30 11/04/24
Petrofac Ltd.
22.70p
15:34 26/04/24
Real Estate Investment Trusts
2,245.84
15:44 26/04/24
Ryanair Holdings (CDI)
€14.41
17:14 17/12/21
Travel & Leisure
7,584.32
15:45 26/04/24
Unilever
4,124.00p
15:45 26/04/24
The mood was again supported by a rally in Chinese equity markets, which lifted basic-resources stocks in Europe. The Stoxx Europe 600 index for the sector gained 1.01%.
Banks also put in a strong performance, with the Stoxx Europe 600 subindex for that sector also up 2.6%.
The benchmark Stoxx Europe 600 ended up 2.08%, France’s CAC 40 closed 3.06% higher and Germany’s DAX rose 2.91%.
In the periphery, Spain’s IBEX 35 ended 3.08% higher and Italy’s FTSE Mib added 3%. The Greek stock market and banks in the country will remain closed until Monday.
“All the problems of the past week appear to be slipping away,” said Chris Beauchamp, senior market analyst at IG. “Chinese equities have bounced, Greece seems to have bowed to the inevitable and acceded to its creditors’ demands, and even the dollar is moving lower thanks to diminishing fears of a US rate hike.”
“[Greek Prime Minister] Alexis Tsipras looks to have given way on many of the sticking points of the past week; he may still try to present any deal as a victory for Greece, but the real truth is that the creditors have prevailed. Athens can hope for a discussion on debt relief, but the past week has shown that this will be done on terms dictated by the eurozone and the IMF, with Athens allowed only a small say.”
Earlier in the session, yields on Spanish and Italian bonds had fallen sharply as the rise in risk appetite prompted investors to sell off German Bunds – known for their safe-haven appeal – and pile into peripheral European debt.
By 17:00 BST, the yield on 10-year Italian government bonds was down by two basis points to 2.14%, while the corresponding Spanish yield was off by the same amount to 2.01%.
Meanwhile, German government debt prices fell, with the yield on the 10-year Bund up 16 basis points to 0.897%.
In currency markets, the euro was 1.02% stronger against the greenback at $1.1154.
Greece has requested €53.5bn to help cover its debts until 2018 and has agreed to implement tax hikes and spending cuts in return. The Greek parliament will vote later on Friday on whether to endorse the new set of proposals put forward to creditors.
“Reports suggest that the policy proposals cover most of the demands of its creditors (i.e., those rejected in last weekend’s referendum), including VAT and other tax increases and pensions reform,” said RBC Capital Markets. “The prospects for agreement appear better than they have for weeks.”
Eurogroup head Jeroen Dijsselbloem said that a decision on Greece’s new reform proposals will be made “probably today”, according to Bloomberg.
EU leaders were due to meet with Greece on Sunday to go over the plans, which French President Hollande has called "serious and credible".
However, media reports on Friday suggested that the summit of European Union heads will be cancelled if Greece and its creditors manage to reach a deal by Saturday.
On the corporate front, InterContinental Hotels rose in London after the company said it has sold its five-star Hong Kong hotel for $938m.
Hammerson nudged higher after announcing that it has sold its stake in a French shopping centre for €63.2m.
Oil and gas and gas services provider Petrofac rallied after saying it has been awarded a $780m contract from Kuwait Oil Company for its manifold group trunkline in the north of the country.
Ryanair was also on the up after saying it has accepted the offer from Iberia and British Airways parent IAG for its 29.8% shareholding in Aer Lingus.
Unilever racked up solid gains after Jefferies upgraded the stock to ‘hold’ from‘underperform’.