Europe open: Indices gain ahead of German economic confidence report
Equity indices in the Eurozone gained as investors pondered developments in Greece and awaited a report that is expected to show German economic confidence rose in April.
The European Central Bank is looking into measures to rein in emergency liquidity assistance to Greek banks, Bloomberg reported. It is understood policymakers have proposed increasing the haircuts banks take on the collateral they post when borrowing from the Bank of Greece.
Athens on Monday issued a decree that requires local governments to transfer balances to the central bank. The Greek government owes the International Monetary Fund debt repayments on 1 May and 12 May.
“The move by the government to effectively confiscate cash reserves from public sector purses throughout Greece is very worrying for two reasons, it reeks of desperation and gives the impression that they are not optimistic on a deal being reached on reforms,” said Craig Erlam, senior market analyst at Oanda.
“It’s believed that this extraordinary measure will raise just over €2bn which will buy the government a little more time but I don’t know what it hopes to achieve.”
The euro was down 0.64% to $1.0669 in morning trade.
ZEW releases its report on German economic sentiment at 10:00 BST. The index measuring confidence is forecast to climb to 55.3 in April from 54.8 a month earlier.
It is an otherwise quiet day of economic data with the week set to pick up on Wednesday with the release of report on Eurozone consumer confidence and US existing home sales along with the Bank of England’s meeting minutes.
On the corporate front, Publicis Groupe, the French parent company of advertising agency Saatchi & Saatchi, jumped after reporting a 32% rise in first quarter sales that beat analysts’ expectations.
Rio Tinto declined after posting an increase in first quarter iron production that trailed forecasts.
L’Oreal SA rallied after the cosmetics giant revealed a 14% increase in first-quarter sales, supported by a weaker euro.
Brent crude fell 0.71% to $63 per barrel at 09:00 BST and West Texas Intermediate dropped 0.76% to $57.44.