Euro hits 6-week high, shares up on euro zone progress

Tue Dec 4, 2012 8:21am EST
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By Marc Jones

LONDON (Reuters) - The euro hit a six-month high and shares added to recent gains on Tuesday on optimism over Greece's plan to buy back debt and encouraging news from Spain and Portugal.

The FTSEurofirst 300 index .FTEU3 of top European shares was up 0.3 percent at 1123.91 points ahead of an expected higher start for Wall Street.

After a mixed open, London's FTSE 100 .FTSE, Frankfurt's DAX .GDAXI and Paris's CAC-40 .FCHI were all in positive territory, helping the MSCI global share index .MIWD00000PUS to add to a five percent rise over the last two weeks.

"Greece is on track with its debt buy back, Spain came out and said it would take the 40 billion for its banks, and Portugal will get its next round of funding," said Heinz-Gerd Sonnenschein, equities strategist at Postbank in Germany.

"Market participants were really encouraged by the Greek buy back, so with it looking like Europe is on track, it is now over to the U.S. (to find a fiscal cliff deal)."

The buyback is a crucial part of a deal reached last week by Greece's international lenders to cut its debt pile and needs to be completed before the IMF can release its share of the aid.

While markets have climbed on progress in the euro zone and signs of faster growth big economies such as China, investors remain wary of the U.S. "fiscal cliff" - $600 billion of impending tax hikes and spending cuts that could push the world's largest economy into recession.

The White House dismissed a proposed deal from Republicans on Monday saying it did not meet President Barack Obama's pledge to raise taxes on the rich.   Continued...

A general view of the German stock exchange in Frankfurt November 7, 2012. REUTERS/Lisi Niesner