World stocks, euro rise on Greek progress
World stocks hit a three-week-high while the euro rose to its highest in a month on Wednesday in a return of risk appetite prompted by expectations of progress on austerity steps and financial aid for Greece.
June 01, 2011 / 15:19 IST
World stocks hit a three-week-high while the euro rose to its highest in a month on Wednesday in a return of risk appetite prompted by expectations of progress on austerity steps and financial aid for Greece.
A Greek newspaper said Greece and an international team inspectors are set to conclude talks in Athens on a medium-term fiscal plan by Thursday. Uncertainty remained on whether private sector debt holders would participate in helping ease the country's debt burden. Data showing a manufacturing slowdown in China and the euro zone helped limit gains as investors remained cautious ahead of the end of the Federal Reserve's $600 billion bond-buying programme this month."The mood does seem to be lifting over the Greek sovereign debt crisis and this is without doubt delivering some short-term cheer across the euro zone," said Cameron Peacock, market analyst at IG Markets.But he added that the U.S. economy was a major concern. "With the QE2 package due to expire at the end of the month, there's no shortage of uncertainty as to what happens when the easy money disappears."The MSCI world equity index was up just over 0.1%, having earlier hit its highest in three weeks.The benchmark index ended May with a loss of 2.5%, reducing year-to-date gains to just over 5 percent.The FTSEurofirst 300 index was down 0.3% on the day while emerging stocks rose a quarter of a percent.Given the euro zone debt crisis and a soft patch in economic data, investors reduced their exposure to stocks in May for the fourth month in a row, Reuters polls showed.At their most pessimistic since the third quarter of 2010, they moved into bonds and cash, according to the surveys.U.S. crude oil rose half a percent to USD 103.25 a barrel, supported by disruptions to oil supplies to top consumer the United States and a political upheaval in Yemen.Bund futures were down 42 ticks.The euro rose to USD 1.4448, its highest since May 5.It briefly fell to USD 1.4390 earlier after German newspaper Frankfurter Allgemeine Zeitung said it is now considered certain that the IMF will not pay its share of a fifth tranche of aid to Greece at the end of June. It did not cite any sources. "The German news report was seen as negative initially but the market does not seem to be putting much weight on it since it is still not clear whether the IMF will stop the next tranche or not," said Adam Myers, senior currency strategist at Credit Agricole.The dollar fell a third of a percent against a basket of major currencies.Two surveys showed Chinese factories expanded in May for the 27th straight month, although at a slower pace, suggesting government efforts to curb credit are helping to cool the economy.In Europe, fresh signs of decline among factories on the euro zone's debt-laden periphery tugged sharply on manufacturing growth across the region as a whole in May.The Markit Eurozone Manufacturing Purchasing Managers' Index slipped to 54.6 from 58.0 in April, revised slightly lower from a preliminary reading of 54.8 but achieving its 20th month above the 50 mark that divides growth from contraction. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
