Europe stocks and euro firm on Greek vote prospects
European stock markets mostly rose on Monday after opinion pollsindicated a victory for pro-austerity conservatives in Greece’s upcoming general election, but Madrid fell on Spain’s bank strains.
The European single currency meanwhile jumped to $1.2574 from $1.2515 late in New York on Friday, when it briefly hit a 22-month low point of $1.2496 on eurozone debt worries.
The eurozone bond market was under renewed tension owing to concerns about the Spanish banking system and despite more optimistic sentiment about Greece.
In Monday morning stock market trading, London’s benchmark FTSE 100 index climbed 0.66 percent to 5,386.64 points, Frankfurt’s DAX 30 rose 0.55 percent to 6,375.01 points and in Paris the CAC 40 gained 0.53 percent to 3,064.02.
“European equities markets are starting off the new trading week on a firmer footing helped by the latest Greek opinion polls putting pro-bail out party New Democracy into a commanding lead,” said ETX Capital trader Markus Huber.
“It seems like that there is slowly a shift taking place within part of the Greek electorate, where anger and frustration about having to endure endless austerity measures are being replaced by the notion that rejecting austerity measures followed by a potential exit out of the euro will bring even more hardship.”
Greek pro-bailout conservative party New Democracy is favourite to secure most seats in the June 17 general elections but without an outright majority, a series of opinion polls showed on Sunday.
The new polls point to a New Democracy victory ranging between 23.3 percent and 25.8 percent of the vote, a result that would require the party to seek additional allies to form a viable government.
Even so, such an outcome in next month’s vote could mean that Greece would respect the terms of its European Union-International Monetary Fund bail-out and remain a member of the eurozone.
The Madrid stock market slid 0.78 percent to 6,491.10 points as Spain’s troubled lender Bankia plummeted 28.66 percent after the bank sought a record 19-billion-euro ($24-billion) state bailout.
Bankia shares dived 45 cents to 1.12 euros when trading was resumed after a suspension.
Spanish banks are at the heart of market fears that Spain, the eurozone’s fourth-largest economy, could be forced to seek an international financial bailout.
Amid the country’s bank tensions, the interest rate on Spanish 10-year government bonds surged to 6.451 percent on Monday.
The interest rate or yield indicated by trading in the 10-year bonds had ended on Friday at 6.311 percent.
A rate above 6.0 percent for a country such as Spain is widely considered to be in a danger zone and close to a level at which a government can no longer afford to finance its debt.
The rise in the Spanish yield took the gap with the rate paid by Germany to borrow for 10 years to a record 5.09 percentage points.
The German 10-year bond, called the Bund, is the benchmark for the eurozone because Germany enjoys the highest confidence rating among investors.
Italy, which is another indebted eurozone nation, borrowed 4.25 billion euros on Monday, also at increased rates.